Corporate bookmaker PointsBet Holdings Ltd (ASX: PBH) recently announced a $ 122.1 million fundraiser to support the US growth opportunity. The company has also witnessed a change in the CEO's statement of interest with four directors who bought a collective stake of $ 2.3 million.
Is this a buying opportunity?
The company has just completed its institutional placement of $ 85.9 million and is awaiting completion of the $ 36.1 million offer. The institutional offer was heavily oversubscribed with a $ 4.00 book-building deficit price, which represented a $ 0.80 premium to the $ 3.20 offer rate.
While a prearranged capital increase is typically a good sign, the high size of acquisition could cope with any potential short-term capital gains. Especially considering that the company just raised $ 75 million for its IPO five months ago.
However, the gradual legalization of sports betting in America is a truly significant opportunity. In an article from The Age PointsBet CEO Sam Swanell said that the US sports betting market could be worth $ 5 billion by 2023 and that his company could realistically get a 10% bit of it. He also said the latest capital raising will give the company a "decent runway," but may need to tap investors again, depending on when other states – especially larger markets such as Texas, California and New York – come into play.
PointsBet has so far shown strong performance, capturing an almost 7% share of New Jersey's online sports betting market in the first quarter of this fiscal year. The company should continue to build on its market share in both current and emerging markets.
Colorado legalizes sports betting
US states continue to open legal sports betting both in a casino retail and through online / mobile sportsbooks. It was only last week that Colorado legalized sports betting, which will begin in May 2020. The license fee for all major licenses and sports betting operators is $ 125,000 per license, and the state expects 40 license applications right outside the gate. PointsBet has both online and retail access to Colorado.
The American sports betting market is full of opportunities and PointsBet will work hard to gain as much market share as possible. The company will continue to burn cash in its US business development, marketing and client acquisition activities when it comes up against long-time fantasy league operators DraftKings and FanDuel .
Ultimate, this is an exciting place to be, and PointsBet is located front and center to take advantage of the opportunity.
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Motley Fool contributor Lina Lim has no position in any of the listed shares. Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all have the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains only general investment advice (under AFSL 400691). Authorized by Scott Phillips.