PointsBet is a growing sports book provider that is relatively new to the US market (entering in 2019). It has an established and strong foot print in Australia – it’s country of origin. It’s strengths lie within their sports betting engines, applications and technology that allows for it to exclusively offer “points betting” in America. Points betting is a type of bet which leverages the wagering amount. The win (or loss) will increase according to the large the winning/losing margin is. PointsBet currently has a foothold in the following US States:
- New Jersey
- New York
It also has strategic partnerships with leading US professional sport teams and sport media organizations.
PointsBet – every point counts is their motto
PointsBet is the pioneer of points betting in the US. Points betting is a type of bet which is considered to be a high risk high return play. This is because, when a bet is place, the potential of the winnings and losses is determine by the margin of the win or loss.
Hence, if the margin of win by the bettor is small, then a small winning is paid out. If the margin of win by the bettor is large, then a large winning is paid out. Conversely the same holds true for losing. Therefore, this type of betting is deemed high risk high return. Having said that, bettors are able to place a stop loss on their bets. A stop loss effectively caps (limits) the loss and in doing so also caps the winnings. The capping of the losses reduces the exposure of losing and protects the bettor from being completely wiped out from a single bet.
Due to the nature of potential high losses, PointsBet requires bettors to have sufficient fund in their account to cover for the potential losses. These funds are then set aside, and the bettor will not be able to touch these funds and use it for other bets until the points bet has been realized.
PointsBet also offers all the traditional betting types. They advertise that they have the most (more than thousands) betting types for the top major professional sports in the US (NFL, NBA, MLB and NHL).
In addition, PointsBet also partners other businesses to provide online and mobile sports betting and player account management.
PointsBet Player Review
We find PointsBet online and mobile app one of the easiest to use. There are literally thousand of betting options to choose from, and is displayed clearly. Easy filtering and search functions allow the user to find the sport and betting types that they want. On the flip side, but because they have so many betting options, sometimes it can be confusing as a bettor, which betting option and type to selection. I guess, sometimes that is too much of a good thing.
Integrated nicely with the bet selection, is the player betting history. Betting history and current bets is extremely important for the serious bettor who needs the ability to generate and download particular reports and statistics to analyze.
We do like how they offer account sign up with risk free bet promotions. Currently these offers will differ from State to State, however we have seen some promotions of up to $1,000 in risk free betting.
Risk free betting, is whereby, PointsBet will give you a free bet at a fixed amount. If the bet is lost, you have lost nothing (because PointsBet gave it to you for free), however if you win, you get to keep the winnings. Often there are Terms and Conditions that apply, and you will only be able to use the risk free bet on certain sports or types of bets.
It’s hard to compare betting odds of PointsBet to other sport book providers (let alone compare among all sport books). However, we do make this observation, all sport books generally offer the same odds on the early outset (on first issuing). We think this is because 1) the algorithms that each sports book use are quite similar and 2) if they do not have the in house ability to calculate the odds themselves, they simply follow the other sport books.
But, what makes PointsBet attractive to sign up to is that it is currently the only provider of points betting odds. Therefore, if you are very good at determining which bets have the best upside, you will do very well with betting with PointsBet.
ASX: PointsBet Holding Ltd – PBH
PointsBet is listed on the Australian stock exchange (ASX) under the code of PBH. As a result, PointsBet is heavily regulated and must meet Australian compliance requirements. You can therefore be assured that PointsBet is one of the most safest sport books to place a bet with.
Because PointsBet is listed, this also provide an opportunity to be a part of the business through purchasing shares on the ASX. If you are an Australian resident, it is easy to create an account with a share trader and purchase the shares. If, however, you are an American then it is a little more difficult. I recommend the best way to gain exposure to PBH would be through an ETF with exposure to the Australian gaming and entertainment sector.
PointsBet was launched on the ASX on June 12, 2019 at $2.00 AUD. Since launch the share price has risen to $14AUD (as at August 27, 2020).
There are several reasons for this strong rise. They include:
- Partnerships with NBA Indiana Pacers, MLB Detroit Tigers and other leading sport teams in the US.
- Acquired licenses in key US States which have legalized sports betting after the Professional and Amateur Sport Protection Act was overturned in May 2018.
- Partnerships with sports media organizations, the most recent with NBC.
Profit and EPS Analysis
The key to understanding the rise, however must include the current market valuation of the company and it’s current and projected profitability.
The company has on issue 153.18m shares at a value of $14AUD each. This equates to a market value of $2.14B AUD.
It’s current project net wins (from sport bets) is projected to be $100m in the coming 12 months. This translates to a P/E ratio of 23 which is an overly optimistic P/E given I haven’t allowed for any expenses in the calculation. As a rough guide, assuming that expenses equate to $50m, then the P/E ratio balloons to 46. This means, is lay person language, it will take 46 years to get your money back, and return of just over 2% per year.
This sounds like a terrible investment, but remember, PointsBet is expected to grow and investors are banking on greater profits. If we assuming that PointsBet can achieve a profit of $500m per year, then the P/E falls to a very attractive 20% return per year.
Of course, the million dollar question is whether PointsBet can reach to $500m per year.
In addition, for Australian investors there is the exposure to foreign currency risk. The USD is weakening against the AUD, and therefore future earning could also be reduced if the AUD continues to strengthen.
In summary, do you think that PointsBet can grows it’s market share and profit by several fold in the long term? If so, then you can also bet on PointsBet shares and be a winner.