PointsBet says gambling reforms will hit smaller players hardest

PointsBet boss Sam Swanell says he is confident his company will be able to navigate the government’s looming moves to tighten gambling regulation, but expects smaller betting businesses to struggle amid a softer wagering market.

The chief executive of the $294-million company known for splashing cash on star-studded advertising campaigns said PointsBet has reduced its spending on marketing by 30 per cent over the first half of this financial year. It has also focused on ousting “bonus chasing” punters who only bet when offered enticing inducements, to make its growth more predictable.

PointsBet chief executive Sam Swanell.
PointsBet chief executive Sam Swanell.Credit: Chris Hopkins

The federal government is preparing to unveil changes to gambling regulation following an inquiry into gambling harm, which recommended an immediate ban on inducements and the eradication of gambling advertisements within three years.

The government’s response to the report was expected in November last year, but a spokesperson for Communications Minister Michelle Rowland said the department is still considering its response.

“I think we’ll end up in a reasonably rational position that will involve some changes, ones we advocate for,” Swanell said. “I think there’s zero chance of a ban on all inducements, but there will be marketing implications. We’re already advertising within where we think the regulation will come into effect.”

He said the expected advertising ban, alongside the increased cost of living and point-of-consumption tax hikes, would decimate some of the smaller operators that do not own their own technology and are more reliant on rapidly attracting customers with enticing offers to increase growth.

Australia gambles more than any country in the world on a per capita basis. But even the most bullish analysts argue the local market is now too mature to require the 140-odd wagering businesses that are all desperate for the same punters.

“The only way they can compete is through over-bonusing clients, and that is not a sustainable business model. I think it’s inevitable there’ll be consolidation and attrition,” Swanell said.

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PointsBet finalised the sale of its US business to merchandise giant Fanatics last year for $225 million, in a deal first reported by this masthead. It expects to have positive earnings before interest, tax, depreciation and amortisation in the next financial year after the sale is complete.

Swanell confirmed on Wednesday the company expects a normalised loss for the 2024 financial year of between $9 million and $14 million when excluding the sale of the US business and other one-off payments.

It expects its net win – money received from customers’ losing bets, minus money paid out to winning bets – across its remaining Australian and Canadian arms to improve by 10 to 20 per cent this financial year when compared with 2023’s $230 million.

The company’s net win improved by 11 per cent over the second quarter – a record for the business, reflecting strong growth in Canada.

Rival online giants Entain and Sportsbet flagged softer returns over the last quarter following a weaker than expected wagering season and increased cost-of-living pressures.

Swanell said PointsBet, which was only founded in 2017, had more room to grow than its older counterparts and had benefited since streamlining its operations to the mature Australian market and the fledgling Canadian market.

PointsBet shares closed $1.64 higher on Wednesday at 93 cents.

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Source: Thanks smh.com