PointsBet talks about selling its Australian business to the vertical Betr of News Corp.

PointsBet, an Australian online sportsbook company, is in talks with Betr, a new betting company, about selling its Australian business. The $411 million company would be able to focus on growing in the US if it sold its Australian business. The start-up would get about 232,000 of PointsBet’s Australian customers.

Potential transaction:

In a press release sent to ASX on Wednesday morning, PointsBet said that it is thinking about selling its Australian business to the betting start-up backed by News Corp: “PointsBet confirms that it is currently in talks with the owners and operators of Australian betting operator Betr about a possible transaction involving the sale of its Australian trading business,” said the statement. “Any potential transaction will be evaluated in the context of PointsBet’s global strategy and opportunities.”

In the statement, it was also said that there is no guarantee that these talks will lead to a deal.

Getting access to technology and a bigger share of the market:

Betr is owned by News Corp, Tekkorp Capital, which is based in Las Vegas, and BetMakers Technology Group, which is traded on the ASX and provides the site’s technology. Betr would be able to use that technology after the sale, which would help it grow faster.

PointsBet has 5% of the market for online sports betting in Australia right now, and their goal is to have 10% by 2025. The company also does business in the United States and Canada. It is the seventh-largest operator in the United States, with a 3.7% share of a $13 billion market.

Discussions before the meeting:

Early this year, Betr and PointsBet had preliminary talks, but PointsBet turned down Betr’s offer. Soon after, Betr bought online sportsbook TextBet for $10 million. Industry sources say that the bid was worth between $220 and $300 million. This time, when the deal was announced, the share price of PointsBet went up by more than 7%, but neither PointsBet nor Betr said anything about the price talks.

Possible advantages:

In addition, Betr would acquire 232,000 Australian PointsBet customers if negotiations succeed. In Q3 2022, these customers generated over $600 million. Selling its Australian operation would allow PointsBet to focus on US growth. Colorado, New York, Pennsylvania, and Illinois are among its 13 states.

In fact, PointsBet lost money for two years, spending $240 million on sales and marketing, $162 million in the US. Any proceeds from the sale of its Australian operation would be used to increase its share of America’s $13 billion pie. Betr’s assessment of Australia’s cost-effectiveness will also affect discussions.