The Pointsbet Holdings Ltd (ASX: PBH) share price will be on watch today after announcing some more good contract news in the US.
Pointsbet is a corporate bookmaker with operations in Australia and the US. It has a scalable cloud-based wagering platform where it offers clients innovative sports and racing wagering products.
Pointsbet’s new US wins
The company announced that its US subsidiary and Penn National Gaming Inc (NASDAQ: PENN) have agreed to extend the online gaming services framework agreement dated 31 July 2019.
Pointsbet said that the agreement was to provide Pointsbet with online sports betting and iGaming market access in Pennsylvania and Mississippi, subject to enabling legislation in Mississippi and licensure in each of those states. Pennsylvania currently permits online sports betting and iGaming already.
As part of the transaction, Pointsbet has agreed to release Penn National Gaming and Penn Interactive Ventures from the disposal restrictions contained in its previous subscription agreement about the shares acquired from the agreement. Those restrictions were due to expire on 1 August 2021. Meaning, it can sell shares earlier than previously agreed. Everything else is the same.
What are the highlights of the new agreement?
The length of this market access contract is 20 years from the date the Pointsbet branded service is first offered to Pointsbet players in the applicable state.
This agreement expands Pointsbet’s United States sports betting footprint in 14 states.
Pointsbet will be responsible for all licensing and approval costs for launching and running the services, including the costs associated with the licensed operator obtaining and maintaining the applicable business to consumer operating licenses required for Pointsbet to operate the services in each additional state.
Pointsbet will pay Penn National Gaming a portion of the net gaming revenue made from Pennsylvania and Mississippi.
Leadership comments
The Pointsbet CEO Sam Swanell said: “We are very excited about adding another two guaranteed online market access points to our portfolio in Pennsylvania and Mississippi. A mature, total addressable sports betting and iGaming market in Pennsylvania is estimated to be over US$1.75 billion per annum. Further, Pennsylvania is home to Philadelphia, the fourth largest media market in the United States, inclusive of southern New Jersey and a regional pillar of the Comcast-NBC Universal asset portfolio. NBC Sports Philadelphia owns the in-game broadcast rights to the Phillies, 76ers, and Flyers covering over 290 live events per year across 4.1 million households.”
Summary thoughts
Getting access to as much of the US population as possible is important for Pointsbet, so this is a good deal. Only time will tell how much market share the company can take – but it’s making the right moves to do well. It could be one to watch.
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