PointsBet and NBC Universal Their sports betting partnership was renegotiated, allowing the broadcaster to add more sponsors and the sportsbook to spend less by moving local broadcasts.
The agreement, announced during the australian-based sportsbook’s earnings call, added two years to PointsBet and original to NBCU five years sponsorship agreement.
As part of the change, PointsBet’s mandatory advertising costs have been reduced 42% on $58 million this year, as it looks to use the regional NBC network where it is already licensed.
Both sides benefit from the renegotiation because it allows PointsBet to stretch its marketing dollars while NBC gets another two years of guaranteed marketing expenses.
PointsBet is focused on local TV
The breadcrumbs of a move like this are in September when PointsBet unexpectedly dropped as the exclusive odds provider for NBC’s Sunday Night Football and BetMGM The move suggests that PointsBet is not seeing the same amount of return on national ads compared to local strategies, which has since been confirmed.
PointsBet thinks that focusing on local ads will be a more efficient use of NBC’s broadcasting and marketing dollars. If the strategy plays out, PointsBet’s ads should be more visible on NBC’s local networks 14 says it’s live.
“We see the benefits in terms of the impact it can have on the brand by going to national properties around the NFL, etc. But when it comes to marketing fees, making sure our dollars in marketing takes us on that path to profitability, it’s more efficient to target it locally and regionally where we live and make sure we get that right than maybe worrying about when California will live and the value of marketing dollars going into that jurisdiction from a — if you’re still spending in the country.
Pointsbet ceo sam swanell
How the regional strategy will play out for PointsBet
NBC owns seven regional sports networks, including in Chicago, Philadelphiaand New York, where PointsBet is live. It is also available in Boston, where PointsBet is expected to launch in a few months.
In Chicago and Philadelphia NBC runs BetCasts, alternative betting-centric broadcasting for MLB, NBA and NHL teams for which it holds the TV rights. They feature the display and discussion of live odds on PointsBet.
The renegotiation also gives PointsBet “first-look” rights to local or regional sports betting and iGaming partnerships opportunities with Comcast, NBC Sports, Peacock Sports and other NBC networks.
The profit plan may vary from operator to operator
PointsBet doesn’t have the capital of FanDuel, DraftKings, Caesars or BetMGM, but it has the same pressure to make a profit.
PointsBet management repeated the words “EBITDA positive” and “profitability path” five times during the one-hour call.
FanDuel expects to be profitable in all of 2023, as it became the first US online sportsbook to turn a profit in a quarter last year. BetMGM recently announced its plan to make sports betting profitable in the second half of 2023 through further investments and more targeted promotional spending.
Most US metrics are up
PointsBet showed growth in most US metrics both sequentially and year-over-year, according to the investor presentation.
The sports betting handle jumped 75% in the fiscal second quarter compared to last year, hit $743 million. The gross win increased 32% on $39 million while the net win increased 51% on $20 million. Both net win and gross win margin fell, however, to 5.2% and 2.7%each one.
PointsBet reported a strong trading performance in October and November, with the VIP game turning negative in December. Trade returned to normal in January with the month’s net gain expected to “significantly exceed” the fiscal second quarter’s monthly net gain.
iGaming net profit also jumped 128% to $8.6 million.
More customers, lower marketing costs
Supporting that growth is a 39% increasing cash-active clients to 292,470 compared to last year. That number of customers is already high 7% from the fiscal first quarter.
The growth came despite reduced marketing costs 17.5% on $24.5 million in the quarter. Its marketing investment to net win payback ratio more than doubled in the first half compared to last year, meaning that customers are earning more quickly.
PointsBet reports a 2.3% market revenue share for online sports betting across US operations. Swanell said the company’s focus is net win growth and not market share.
As long as the company continues to see the year-over-year growth it has seen in the past two quarters, the brand will grow its share and do so at a sustainable rate, he said.
In-play betting is now more than half of management
PointsBet says this has significantly reduced live-market suspensions over the period NFL game compared to the 2020-2021 season. That helps the in-play handle to be 53% in the handle of the quarter, from 47% last year.
NFL Lightning Bets accounts for a fifth on all cash in-play bets during the quarter.
PointsBet’s stock plummeted
The earnings report and the restructured NBC deal led PointsBet stock to fall 17.4% on A $1.40.
“We are pleased to agree with NBCU on mutually beneficial adjustments to our agreement that fit perfectly within our more targeted, localized strategy, announced by the learned,” PointsBet CEO Sam Swanell said during Monday call. “Simply put, we firmly believe that a dollar spent on marketing on any other platform does not come close to competing for the terms and effectiveness of the partnership we currently have with NBCU.”
The renegotiated agreement leaves $245 million of money to be spent at the end five years in the deal. NBC has an option to buy approx 67 million shares of A$13.00 on 2025but at this time, PointsBet believes that NBC will not buy those shares.
PointsBet shares are closed on A $13.02 when the deal was announced in August 2020.
LSR reporter Matthew Waters contributed to this story.
