The PointsBet Holdings Ltd [ASX:PBH] was today recommended for a mobile sports wagering license in New York.
PBH share price is currently up 8% with this news.
While today’s update was received well, PointsBet is still down 20% over the last 12 months, well underperforming the ASX 200.
PBH recommended for New York license
At a public meeting yesterday, the New York State Gaming Commission (NYSGC) recommended that PBH be awarded a platform provider license.
The license will allow PointsBet to operate mobile sports wagering in the US state of New York.
But PBH was not the only one to receive the recommendation.
Eight others were recommended by NYSGC: FanDuel, BallyBet, BetMGM, DraftKings, Rush Street Interactive, Caesars Sportsbook, WynnBET and Resorts World.
It’s a handy list of peers PBH will likely compete for business with.
Can all nine operators carve out a profitable niche in the lucrative New York state? Or will the competition lead to a race to cut costs…and shrink margins?
PointsBet further noted that official approval procedures will follow. The recommended operators will undertake independent system testing ahead of an official launch expected in early 2022.
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PointsBet US CEO, Johnny Aitken, was excited by the recommendation:
‘Having the potential to secure market access to New York state — expected to be one of the largest and most important markets in the United States — represents another major milestone for our company, our brand, and our technology.
‘We are thankful to the Gaming Commission for this recommendation and believe it speaks volumes to PointsBet’s reputation and ability to deliver an unrivaled, world-class experience.
‘We eagerly await the official opportunity to leverage our exclusive sports betting partnership with NBC Sports and introduce the nation’s premier sports betting product to the countless passionate, sports-loving New Yorkers.’
While first-mover access to large markets has been PBH’s focus recently, it has come with big costs.
In FY21, PBH’s reported revenue jumped 159% to $194.7 million, but came at a hefty price.
PointsBet posted a 313% increase in losses from $39.7 million in FY20 to $164.3 million in FY21.
Will a New York license help curb PBH’s cash burn? Or will the other eight operators cut PointsBet’s market share?
Interesting questions that the market will no doubt monitor in the months ahead.
PBH has been a growth stock garnering plenty of attention.
But this attention can limit mispricing opportunities…that’s why many are attracted to the small-cap sector, with its unheralded and underreported gems.
Seven of these small-cap gems were recently profiled by our guru Murray Dawes in a detailed briefing.
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For Money Morning
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