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PointsBet’s Deal With NBCUniversal Widely Viewed As A Game Changer For Sports Betting Market

The deal provides NBC with a 4.99% stake in PointsBet with the potential for larger equity stake

Matt Rybaltowski by Matt Rybaltowski
August 28, 2020
in Industry
pointsbet nbc sports

(Raj Mehta-USA TODAY Sports)

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PointsBet USA CEO Johnny Aitken arrived in New Jersey in 2018, following the Supreme Court’s landmark PASPA case, as a relative outsider.

Immediately, Aitken was forced to navigate through shark-infested waters that characterized the hotly competitive U.S. sports betting market, one dominated by mega casino corporations such as MGM Resorts International and Caesars Entertainment, along with DraftKings and FanDuel, two heavyweights on the DFS side.

At the time, Aitken simply sought to put the Australian sportsbook on the map with its innovative spread-betting concept. While PointsBet has fought to wrestle market share in the Garden State from the aforementioned DFS giants, the company has made headlines with its creative bet types (one bettor won $600,000 on the company’s PointsBetting platform last September when the Baltimore Ravens crushed the Miami Dolphins 59-10). On Thursday, PointsBet may have struck gold.

PointsBet announced Thursday that it entered into a five-year partnership with NBCUniversal in a deal that designates the sportsbook operator as the official sports betting partner of NBC Sports. Under the partnership, NBCUniversal is receiving a 4.99% equity stake in PointsBet, pending shareholder approval and 66.88 million PointsBet options maturing in five years, PointsBet said in a statement.

“No one has a better brand than the Peacock and NBC Sports, to have a true association with them will be extremely powerful,” Aitken told Sports Handle.Β 

“A transformational deal”

1/ A lot of sportsbooks went far down the path with NBC. FanDuel was close enough last month that a few outlets considered breaking the story.

So why does NBC choose @PointsBetUSA and not another operator? Probably an intricate combo of reasons, but a few things stand out …

— Chris Grove (@OPReport) August 28, 2020

The deal is valued at nearly $500 million, according to Sportico, which first reported news of the partnership. The deal gives NBCUniversal the option of increasing its stake to 25% at the end of the five-year period, Sportico reported.

The partnership is the latest bid by a prominent media company to align with a sportsbook operator, following similar deals between William Hill and CBS Sports, BetMGM and Yahoo, as well as FOX Bet and The Stars Group (leading to a merger between The Stars Group and Flutter Entertainment). NBCUniversal was once rumored to potentially join forces with Penn National Gaming, given that several former NBC executives now work for Penn Interactive Ventures. Instead, Penn purchased a 36% stake in Barstool Sports for about $163 million in cash and convertible preferred stock.

Roundhill Investments CEO and co-founder Will Hershey views the PointsBet transaction as a transformational deal for the U.S. sports betting market, with NBC entering the space following CBS and FOX.

NBC Inks $500 Million Partnership With Gambling Operator PointsBet https://t.co/BdSnB5t055

— Roundhill Investments (@roundhill) August 27, 2020

“This is one of the most involved partnerships,” Hershey told Sports Handle. “I think this also further legitimizes PointsBet’s presence in the U.S. market. Right now they’re a small player, but that could change quickly. We may soon be talking about them in the same breath as DraftKings and FanDuel.”

Hershey launched Roundhill’sΒ Sports Betting & iGaming ETF (BETZ) in June. As of Aug. 27, at market close, PointsBet was the second-largest holding in BETZ with a weighting around 6%.

Parameters of the deal

The agreement is highlighted by the allocation of approximately $393 million in marketing spending over the five-year period, an amount intended to be allotted in progressively increasing amounts over the life of the deal. PointsBet will receive exclusive gameday integrations across NBC Sports’ eight regional networks, while the deal calls for incentives payable to NBCUniversal for customer referrals.

PointsBet not only gains access to NBC’s broadcast assets, comprised of 184 million viewers, according to the companies, it will tap into the network’s digital assets, which span 60 million monthly active users, said Sam Swanell, who serves as managing director and group CEO at PointsBet. The figure is comparable to the 66 million unique viewers that Barstools estimates visit its site each month.

The combination of NBC’s network reach and PointsBet’s modern technological offerings provides a recipe for converting a wide range of cohorts, a portfolio manager for a pure iGaming and Gaming fund told Sports Handle.

“Now there’s a story for PointsBet in lowering customer acquisition costs if NBC gets involved even further down the line and sees PointsBet as an associate, rather than an affiliate partner,” he said.

The portfolio manager, who spoke toΒ Sports HandleΒ on the condition of anonymity, has more than 14,000 followers on hisΒ Twitter account,Β @dividendblower.

“PointsBet truly put itself on the U.S. map with this deal and due diligence from NBC,” the manager added.

In terms of establishing trust and credibility with customers, Aitken noted that FanDuel and DraftKings have spent about $2.5 billion on marketing to build brand awareness. Prior to the NBC announcement, PointsBet spent roughly 1/100th of the total through its marketing budget, investing less than $20 million, he explained. Aitken also drew comparisons with the business models utilized by Facebook and Google when describing how the addition of a signature brand can improve marketing efficiency.

“It’s going to be a huge shot in the arm,” Aitken said of NBC’s favorable brand reputation.

Touchscreen betting and voice activation

Given NBCUniversal’s global reach through Comcast, the partnership with PointsBet touched off a vigorous debate on Twitter. Down the road, will it be possible for bettors to place a wager on PointsBet using touchscreen capabilities directly from a game broadcast? Remember, NBC Sports Washington was the first network to experiment with a live, predictive gaming contest (with odds and props on the screen) as a supplement to traditional sports broadcasts. The regional network first offered the alternative broadcasts for select Washington Wizards games in January 2019, before expanding to Capitals’ NHL telecasts.

In their deal with NBC/Comcast, PointsBet is going to be the first US sportsbook to be integrated into that "last mile" in the form of Comcast TV/internet users and NBC viewers. 🏠

That advantage can't be understated. 🧐

— Captain Jack Andrews (@capjack2000) August 27, 2020

Going one step further, the betting enthusiasts wondered out loud if the companies may consider using voice activation software through a remote to enable customers to place bets. Aitken did not dismiss the possibility, noting that there is potential within the deal’s investor deck to unlock opportunities with the Xfinity voice remote.

Ultimately, Aitken believes the partnership will be a catalyst for increased market share. In a 60-page deal presentation, PointsBet outlined a path to 1 million U.S. active clients and a 10% share of the U.S. sports betting market.

“Being a kid obsessed with U.S. sports, watching the 1996 Olympics with Michael Johnson and that Peacock logo everywhere, to think PointsBet will now be next to the Peacock logo, it’s all very exciting,” he said.

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Matt Rybaltowski

Matt Rybaltowski

Matt is a veteran writer with a specific focus on the emerging sports gambling market. During Matt's two decade career in journalism, he has written for the New York Times, Forbes, The Guardian, Reuters and CBSSports.com among others. In his spare time, Matt is an avid reader, a weekend tennis player and a frequent embarrassment to the sport of running. Contact Matt at matt@usbets.com.

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