PointsBet burning cash for no growth

PointsBet (ASX: PBH) shares have slid to 18-month lows after the bookmaker reported its slowest turnover growth since listing in June 2019. 

PointsBet reported $1.33bn in turnover, up 11% from last year, while the US business - pegged as the company’s growth engine - experienced negative turnover growth, down -9% to $598.8m. 

Market share has also been going backwards, with an all-important state like New Jersey reporting 3.1% market share in the second quarter FY22. This compares to 3.9% in the first quarter of FY22 and 7.8% in the fourth quarter of FY21.

There should be no excuses given the US$29.7m marketing spend, compared to US$18.2m a year ago.

While top-line figures faltered, PointsBet recorded a 425% increase in gross win - the amount wagered minus the amount won - to $41.6m. 

PointsBet has flagged volatility for turnover, gross win and net win figures from US clients whose average bet size is significantly above the median.

PointsBet’s Australian business did the heavy lifting to drive the 11% increase in turnover. Regional turnover increased 34% to $727m, supported by events including the Melbourne cup, Caulfield Cup and Everest Day. 

Spend money to make money

For the uninitiated, the US legalised sports betting in 2018, enabling individual states to manage their betting laws. 

Opening the floodgates for betting has been viewed as a land grab opportunity, with both local and international bookmakers fighting for early market share. 

This has in turn seen PointsBet rack up a $164.3m loss in FY21. 

PointsBet reported cash outflows of $51.8m in the December quarter with a remaining cash balance of $569m.

Pointsbet share price movement over 12 months