Penn National doubles down on PointsBet stake
US operator exercises option to increase shareholding over 5% in A$35m deal
Penn Interactive Ventures (PIV), the online subsidiary of Penn National Gaming, has increased its shareholding in Australian sportsbook operator PointsBet in a A$35m (£18.5m) deal.
In a trading statement released on the Australian Securities Exchange, PointsBet confirmed the increased shareholding, which occurred due to Penn exercising an option to increase its stake.
Under this arrangement, PIV has purchased 10,372,549 shares in PointsBet for a price of A$3.374 (£1.78) per share, at a total cost of A$35m.
These options were afforded to Penn following its initial purchase of 6,127,451 shares in July 2019, and had been due to expire on 12 September, after which the firm would lose preferential rights of the shares.
The options formed part of a 20-year market-access agreement between the two firms dating back to August 2019, under which PointsBet gained skin access to five US states.
The deal was agreed on a revenue-share basis with monies being funnelled to Penn National based on the net gaming revenue of PointsBet’s operations in these states.
As part of the deal, PIV took a strategic equity stake of 5.28% in PointsBet, together with an agreement to pay an additional $2.5m access fee for the Ohio sports betting market, based on certain conditions, payable in cash or equity at Penn National’s option, which has now been exercised.
This latest deal brings the firm’s shareholding in PointsBet up to 16,500,000 shares, representing voting power in the business of 6.27%, making it a “substantial” shareholder in the business.
Substantial shareholders can use their voting power to potentially veto mergers and acquisitions, exercising control over the firm as well as gaining access to sensitive financial information.
Penn National Gaming recently agreed a $2bn deal to acquire Canadian-based theScore, a firm which is a direct competitor to PointsBet in the soon-to-be-regulated Canadian market. In addition, Penn operates the Barstool sportsbook in the US, another competitor to the PointsBet business.
PointsBet has enjoyed a stellar 2021, with its full year 2021 revenue growing 159% year-on-year to A$194.7m (£103.6m).
The ASX-listed operator reported a 201% increase in gross win to A$353.1m amid a 228% jump in handle, which grew to A$3.78bn.
Gross profit for the firm skyrocketed 129% to A$87.6m during 2021 but losses after tax for the year increased by 351% to A$164.3m.
Company EBITDA losses also tripled during 2021, from a 2020 cost of A$37.6m to A$156.1m in 2021.
In July, the firm completed a A$400m share rights issue looking to jumpstart its assault on the US sports betting market.
PointsBet has since enjoyed mixed fortunes in the US, expanding its footprint to West Virginia while also being named as one of the NFL’s latest tranche of approved sports betting operators.
However, the firm was frustrated in its ambitions to expand into the Arizona market when regulators in the Grand Canyon State denied the firm and its partner, the Yavapai-Apache Nation, a sports betting licence.