PointsBet US Operations a Hot Mess, Says Former Employee

Posted on: September 7, 2022, 03:57h. 

Last updated on: September 7, 2022, 04:20h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

PointsBet (OTC:PBTHF) is well-known in its home country of Australia, and it’s aiming for similar status in the US. But a former staffer claims the bookmaker’s US operations are beset by strategy missteps and a toxic culture.

PointsBet
An advertisment for PointsBet. A former employee says the company’s US business has lots of problems. (Image: BettingPros)

The ex-employee, identified only as Mr. X, made the remarks in an interview with Stream. Stream, which connects former employees at a variety of firms with institutional investors mulling stakes in those companies, reportedly verified Mr. X was a PointsBet staffer and that he worked for the gaming company in Australia in the US.

Mr. X claims PointsBet’s approach in the US is similar to those of rivals, such as DraftKings (NASDAQ:DKNG) and FanDuel. That playbook often centers around aggressive marketing and promotional spending in an effort to create loyal customers. But the former worker said the PointsBet brand simply is resonating with US bettors.

They just don’t know what they’re doing. Nothing’s going to change if senior leadership stays the same, if the CEO of the US business stays the same,” said Mr. X in the Stream interview.

PointsBet launched in the US in 2019 and is operational in Colorado, Illinois, Iowa, New Jersey, “and beyond,” according to its website.

PointsBet Profitability Problem

Like many of its US rivals, PointsBet faces the conundrum of rising revenue and a potentially lengthy road to profitability.

The company’s latest financial results showed a 52% surge in revenue, but a loss of $181.2 million in US dollars, which was wider than the year-earlier loss. Amplifying those woes is the fact that FanDuel recently notched the first profitable quarter in the history of the post-2018 US sports wagering industry. That’s while operators such as Barstool Sportsbook, BetMGM, and Caesars Sportsbook, among others, are also close to shedding their money-losing ways.

Mr. X, who departed PointsBet approximately a year ago, said he’s broadly bullish on sports wagering in the US, and highlighted FanDuel’s ascent to profitability in his remarks to Stream. However, he has doubts that his former employer will attain such heights.

“When I contrast that to PointsBet, I’m very bearish because I don’t have any confidence in the US leadership delivering anything. Nothing has changed. While I was there, after I’ve left, it seems to be the same story,” he said.

Still, PointsBet has its supporters in the US. In June, SIG Sports Investments Corporation (SIG Sports), a unit of Susquehanna International Group (SIG) of Companies, took an almost 13% stake in the Australian company, while Penn Entertainment (NASDAQ:PENN) owns nearly 6% of PointsBet equity.

PointsBet Partnership Problems

Like many sportsbook operators in the US, PointsBet has partnerships with media outlets and teams. But Mr. X says the company’s spending on such endeavors isn’t bearing fruit, and that those expenditures would have been better directed to other pursuits.

For its part, PointsBet decries the former staffer’s claims, noting Mr. X may have been paid to make those less-than-savory remarks.

“PointsBet strongly rejects the assertions made by an anonymous former employee who was likely compensated for an interview with a third-party firm … PointsBet stands by its culture and utterly rejects baseless accusations made about PointsBet’s business and leadership,” a company spokesman told the Australian Financial Review.