PointsBet has acquired B2B betting algorithm and platform developer Banach Technology for $43m to help grow its US market footprint. [Image: Shutterstock.com]
Terms of the acquisition
Australia-based PointsBet Holdings Limited announced on March 16 that it has bought B2B betting algorithm and platform developer Banach Technology in a deal worth $43m. The sports betting operater hopes that the acquisition will help bolster its efforts to capture market share in the US.
Ireland-based Banach Technology focuses on the development of complex trading models for pre-game and in-play betting products, as well as providing proprietary risk management platforms to operators. PointsBet’s Irish subsidiary Lockspell Limited will carry out this acquisition.
PointsBet expects the deal to close in April 2021
PointsBet will pay 55% in cash as part of this deal, with the remaining 45% coming through the issuance of about 1.75 million PointsBet shares to Banach Technology. PointsBet will also be providing $4m worth of funding to Banach Technology to help with converting existing equity options. These funds will be retained by the PointsBet Group following the deal’s completion. PointsBet expects the deal to close in April 2021, subject to relevant closing conditions.
Banach Technology CEO Mark Hughes will become the chief operating officer at PointsBet Group, with the company’s two other founders also holding PointsBet roles.
The three founders originally helped to establish the quantitative department in Flutter Entertainment’s Paddy Power before starting Banach Technology in 2015. The software company will still honor its existing contracts with numerous notable sports betting operators, whose revenues will help with Banach’s overheads.
A focus on in-game betting
Talking about the acquisition, PointsBet US CEO Johnny Aitken referred to the different benefits that the transaction will unlock, including improvements to PointsBet’s in-play offerings.
about 75% of all sports bets in the US will be through in-game markets within three years
Aitken spoke about the growing popularity of in-play betting, particularly in the US. He estimates that about 50% of all bets at PointsBet US currently are in the form of in-game wagers. The operator believes that about 75% of all sports bets in the US will be through in-game markets within three years.
PointsBet believes that the latest acquisition will help position it to take advantage of in-game betting growth, optimize margins, and offer superior value to bettors. PointsBet Group managing director and CEO Sam Swanell spoke about the company’s ethos when it comes to technology, saying: “Technology is at the forefront of everything we do at PointsBet and we have undertaken an in-house approach to proprietary technology as the key priority.”
Banach’s Mark Hughes said the team looks forward to helping in “accelerating and strengthening PointsBet’s pre-game, in-play and free-to-play offering in the US.”
Growing its US market presence
With more and more states set to legalize the activity in the coming years, operators are looking to grab as much US sports betting market share as possible. PointsBet too is looking to gain a foothold.
Founded in 2017, the sports betting operator started out with a focus on the Australian market. It entered the US in January 2019 by launching an online sportsbook in New Jersey. PointsBet online sportsbooks are currently up and running in New Jersey, Illinois, Colorado, Indiana, Iowa, and Michigan. PointsBet-branded retail sportsbooks are also open in Iowa, Indiana, and Illinois, with plans to launch in Colorado and Michigan later this year.
In February, PointsBet signed a strategic partnership with the National Hockey League (NHL). It also has a relationship with Major League Baseball (MLB), PGA Tour, National Basketball Association (NBA), and National Football League (NFL). Individual teams partnered up with PointsBet include the Indianapolis Colts, Chicago Bears, and Indiana Pacers.
The operator also has an equity partnership worth about $500m in place with NBC Universal. PointsBet is looking to leverage the extensive sports broadcasting abilities under the NBC umbrella to gain customers.
PointsBet’s in-play betting stats and odds integrate into broadcasts on NBC Sports regional networks and the Golf Channel. PointsBet believes that these integrations will lead to people viewing more games and staying engaged for longer. NBC has the option to increase its equity stake in PointsBet to 25%.