Canadian growth so far
As a result of the short time frame, the business generated net win of just A$0.2m between its launch and the end of the financial year 2022 in June last year.
The operator’s FY23 results, therefore, followed its first full financial year of operating in the market, and saw it generate A$18.3m in total net win, up more than 100-fold compared to FY22.
Australia’s limited growth prospects
Despite rapid growth, Canada remained well behind Australia in terms of the proportion of revenue generated, as PointsBet’s home market brought in A$211.7m in net win, or 92% of the total generated by continuing operations in FY23.
That figure, however, represented a year-on-year drop of 1.7%, as PointsBet faced a tough comparative period which saw online revenues boosted as a result of the Covid-19 pandemic.
Commenting on the drop during the firm’s FY23 earnings call, PointsBet CEO Sam Swannell said: “In Australia, clearly we grew our market share as we’ve now seen Sportsbet, TAB, and others report for FY23.
“So we know that even though this was a correction year for the online market following Covid – we were down 2% – we’ve grown our market share.
“For things that we can control, we’re very confident about our ability to grow our market share, but we also do believe, having had that correction year, that the online market in Australia will get back to some modest growth driven by the continued strength of sports, and hopefully racing can get back into positive territory.“We want to see Australia grow, but Canada’s going to provide the bulk [of growth] coming off that earlier stage starting point.”
The Canadian opportunity
The reasons behind PointsBet’s confidence in the Canadian market as a growth driver are several, not least the fact it is an earlier stage market than Australia and thus provides a greater growth opportunity in its formative years.
Still, given the two markets’ relative size, CEO Swannell was quick to point out that Canada is unlikely to become PointsBet’s largest market by proportion of revenue generated.
“Ontario is a circa $2bn market, while the online market in Australia is a circa $5bn net win market, so as we think about Ontario compared to Australia, it doesn’t have the same size of market just at the moment,” he commented.
According to Swannell, plenty of reasons to be cheerful remain about the market’s prospects into the future, however.
“We do expect the TAM in Canada to naturally increase, and we believe that there’s a good chance that Alberta for example gets added to the TAM in the second half of calendar year 2024, so that $2bn market could become $2.5bn,” he added.
“And to be honest, we think that those market estimates for Canada are probably conservative given that they do have online casino, live betting and pre-match sports betting.”
The availability of that product mix should allow PointsBet to extract more value from its customers in Canada when compared to Australia, where only pre-match sports betting is available.
Looking to the year ahead, PointsBet has reiterated previously issued advice that it expects to reach an EBITDA breakeven point around April 2024.
FY24 total net win is expected to be around 10-20% higher than in FY23, and the business is predicted to deliver positive group EBITDA from FY25.