This week, Fanatics announced that it has inked a deal for the acquisition of leading gaming brand, PointsBet in an agreement worth approximately US$150 million. Now, shareholders of PointsBet will vote on the sale in June, and the deal is still subject to regulatory approvals. However, the purchase of the company raises questions about whether it would affect its Ontario operations.
Currently, PointsBet operates in Ontario and its online gaming market for third-party operators which launched in the spring of 2022. The digital sector is the first of its kind for Canada and is overseen by the Alcohol and Gaming Commission of Ontario. It also attracted interest from numerous operators transforming it into a top-five gaming jurisdiction in North America.
Canada Remains High Priority Territory
In a joint statement, both companies announced that a deal has been agreed. The two parties shared that there are still a few steps left to finalize the transaction, but both remain confident that it will be completed. The involved parties said that they will provide more details about the inked contract and more information in the upcoming weeks.
But this week, Managing Director and Group CEO of PointsBet, Sam Swanell, assured that the company will continue its business in Canada. He said the company’s level of cash investment required in the US to reach profitability was quite different from the one in Canada. He projects that the operator is on a path to profitability within 18 to 24 months, without additional funding.
Mr. Swanell further elaborated that for its first year in Ontario, the company successfully raised brand awareness and the operator wants to build on the initial momentum and keep expanding. He clarified that as part of the acquisition deal, the operator will keep control of its technology stack, which is highly renowned in the industry, and its market-leading live in-game betting options.
Previously the operator reported that its net proceeds hit US$4 million in the third quarter of the 2022 fiscal year. This was a 21% increase over the prior quarter. Most of it was generated via its online casino section with US$2.4 million and US$1.6 million from sports wagers. During that quarter, the operator had approximately 28,000 active Canadian users.
Then in Q4 of fiscal 2022, the operator reported a slight dip with a total betting handle of US$11.1 million and US$500,000 in gross gaming proceeds. But the company remains optimistic about its operation in Canada. It also disclosed double-digit turnover growth in its US and Canadian activities with an 18% year-over-year improvement.
However, it should be also reminded that the operator’s business in Ontario was not exactly smooth sailing as it was imposed a financial fine by the Alcohol and Gaming Commission of Ontario. In May 2022, the watchdog said PointsBet Canada violated provincial gaming standards with some of its advertising initiatives by putting up posters in GO stations and on GO trains that featured inducement to play for free.
Recognized for its Social Responsibility
Additionally, at the start of 2023, the leading betting brand announced that it has been awarded the RG Check program by the Responsible Gambling Council for its responsible play efforts. The RCG is based in Toronto, Ontario, and is one of the leading global authorities on responsible gambling. It operates independently from the industry, allowing it to provide impartial insights and services.
Source: Pierre, C.J “Fanatics Buys PointsBet US, What Does This Mean For PointsBet Ontario?” PlayCanada, May 16, 2023