Having widened its losses in FY23, wagering company PointsBet Holdings (ASX: PBH) has decided to let go of its US divisions, selling them to US-based Fanatics Betting and Gaming (FBG) for $333 million.
The Company has received $270.10 million (along with agreed-upon adjustments) as the first payment out of the total purchase amount of $333 million. Additionally, it has moved the operational enterprises in the listed states to FBG: Colorado, Iowa, Kansas, Maryland, New Jersey, Pennsylvania, Virginia, and West Virginia. Collectively, these states are referred to as the Initial Completion States.
The ownership of PointsBet’s Advanced Deposit Wagering (ADW) racing enterprise (known as PointsBet Racing and operated under Premier Turf Club LLC) has also been handed over to FBG. The transition of further operations in US states to FBG will occur as the necessary gaming approvals are secured. PointsBet will maintain its role in delivering services to FBG for running operations in the Initial Completion States and ADW until Subsequent Completion. FBG will provide reimbursement to PointsBet for the expenses incurred in rendering these services.
The move comes as the Company’s EBITDA loss worsened by 117%, going from a loss of $26.2 million in FY22 to $57 million in FY23. Its overall loss for the year widened by 424% to $107.9 million. Summing it up, PointsBet expects FY23 to be its maximum EBITDA loss year.
The deconsolidation completion’s deadline is February 29, 2024. At this point, or possibly earlier if all prerequisites for Subsequent Completion are fulfilled, FBG will take possession of the remaining portion of PointsBet’s US operations, along with PointsBet’s assets in Europe.
What’s more, on August 29, 2023, shareholders approved a return of capital, in aggregate across two tranches (the First Capital Return and Second Capital Return), of an amount not exceeding $458 million. The Company will be making the First Capital Return of $315.41 million, representing $1.00 per share, on September 4.
PointsBet ended the year with its cash balance declining from $519.6 million to $212.1 million. In FY24, it expects the corporate segment EBITDA loss to reduce by about 35% to 45%.
For Fanatics Betting and Gaming, this opportunity is a great one for its expansion. It has rebranded PointsBet to “PointsBet, a Fanatics Experience”. Per the CEO of Fanatics Betting and Gaming, Matt King, “We have a ten-year plan that focuses on the customer and not market share. We are going to acquire customers efficiently, allowing us to return savings to customers by investing in the customer experience at Fanatics Sportsbook and PointsBet, a Fanatics Experience.”
As all the required permissions are secured, Fanatics Betting and Gaming is gearing up to expand its online wagering business and offer users great deals in the upcoming football season.
For PointsBet, the focus has shifted to making the most of its Australia and Canada divisions after having sold off its US arm and deconsolidated its Ireland business.
Alinda is a Business Reporter for The Sentiment
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