NBC execs might be basking in the limelight of broadcasting the Super Bowl this weekend, but honchos at their official sports-betting partner — PointsBet — won’t exactly be spiking balls in the end zone.
After a wave of competitors rushed to the market in the wake of relaxed sports-betting laws across the country, PointsBet’s shares have sagged.
In August 2020, NBC and PointsBet reached a much-celebrated deal in which PointsBet agreed to spend $393 million on NBC TV ads over five years. NBC, meanwhile, agreed to take a 4.9% stake in the betting company, with an option to buy up to 25% of the bookmaker at the end of the agreement.
Australia-traded PointsBet’s shares quickly doubled to above 13 Australian dollars a share in the wake of the NBC deal. But now, PointsBet is trading at a little over 5 Australian dollars a share.
To make matters worse, several sports-betting operators approached PointsBet offering to buy the company right before it reached the NBC deal — and PointsBet refused, people familiar with the matter said. Instead, PointsBet insisted on forging ahead with NBC, the people said.
The problem is there is too much competition and it costs too much money in promotions to attract gamblers, industry watchers say. In New York, where PointsBet is one of nine licensed operators, there is also a 51% tax rate on all revenue that leads to losses.
And PointsBet, too, has to spend about $80 million annually with NBC on marketing — besides its spending on other advertising.
PointBet’s shares fell about 40 percent last year, and are off again in 2022. Credit Suisse said in a report last month said PointsBet might need to raise capital in the not-so-distant future.
Despite its partnership with NBC, PointsBet is not taking any ads out during the Super Bowl.