Making a point: How PointsBet made a name for itself in NJ

Not many sportsbook start-ups in New Jersey can claim to have been covered in the New York Times, Bloomberg, Sports Illustrated and on Good Morning America. But that’s exactly what Australia-owned brand PointsBet has managed to achieve, just months into its existence in the US.

The firm has hit the headlines for a variety of reasons, largely down to its so-called Good Karma committee, which has taken advantage of high-profile sporting events, like the blown call in the NFC Championship game, or Zion Williamson’s exploding shoe, to refund bettors on the wrong end of some crazy sporting moments.

PointsBet has also paid out four months early on James Harden to win the NBA’s MVP award, and pays out early on AAF games if teams go up by 14 points.

None of these concepts are particularly new – indeed executives from Paddy Power and bet365 will recognize these various PR stunts very well – but they are unique in the US market, and as noted are drawing some very high profile – and broadly positive – coverage.

“It’s been a great start,” confirms Johnny Aitken, the CEO of PointsBet USA, who learned the bookmaking trade in Australia, taking on high-rolling punters first with Tom Waterhouse, then William Hill.

“We’ve had a lot of feedback on the promos, the vast majority of it highly positive, but you get naysayers saying it’s a gimmick or a one off,” says Aitken. “But I want to make it clear that this isn’t a gimmick. This is a core part of what we’re about, having our clients back and giving them value. No-one was really competing on price in New Jersey or giving value so Good Karma payouts are something we were planning for a long time. It’s just a way to bring some life to the market.”

Turning heads

Turning heads among the media is one thing, but actually turning those headlines into paying customers is another thing entirely. Aitken says PointsBet has indeed seen a massive uplift in customers coming through the door, with “tens of thousands of uniques” going onto the site after the initial pay-out for New Orleans moneyline bettors after the NFC Championship Game. The PointsBet app also leapt into third place in iOS downloads for gambling apps, behind only the DFS brands in FanDuel and DraftKings, and ahead of the likes of William Hill and BetStars, which have billion-dollar international companies behind them.

“For an operator of our size that shows the power of savvy marketing,” Aitken says. “The PointsBet brand is at least on equal footing with the likes of William Hill after a few weeks.”

The innovative approach to marketing can also be seen in the firm’s partnership with Topgolf in New Jersey, which will see Topgolf expand its sports bars, adding more TVs and screens with PointsBet odds. The bars will be rebranded with PointsBet logos, and special gambling offers will be available to Topgolf customers, although no bets will be placed onsite.

But just how sustainable is this Good Karma and marketing onslaught for an operator the size of PointsBet? While Aitken says he enjoys the freedom of not having to answer to “a mothership in the UK” like some rivals, does it also mean the PointsBet marketing budget might suffer by comparison?

Not so, according to Aitken. “We have a different view on the market to our main competitors,” he says. “We are in a growing market. We won’t be outmuscled on marketing and on promotional spend. We’re going to be foot to the floor for the first three to five years. We’re not here to make up the numbers. Internally we want to have significant market share and the way to do that is being really aggressive.”

It’s wrong to suggest that PointsBet is lacking in funding of course. The operation has about 40 shareholders from the US, Hong Kong, Singapore and the UK, who provided a fresh $30m of equity for PointsBet’s US ambitions. One of those shareholders is News Corp, which owns the New York Post, The Wall Street Journal and Fox News, and could provide media support for the brand.

“This is not about a one-year P&L,” adds Seth Young, PointsBet’s chief innovation officer, who joined from Foxwoods Casino in Connecticut this year. “This is about capturing a chunk of a emerging large-scale market for the long term. If you believe PASPA is changing the market forever in this country, why would you turn away business? We believe business breeds business. It’s amazing what happens when you treat people like people and treat them with respect.”

Built for bookmaking

A key part of that customer-first ethos is actually laying proper bets to proper bettors and refusing to impose the restrictions that have caused such a stir in the young New Jersey market. “It’s downright un-American,” said professional bettor and former ESPN analyst, Rufus Peabody, recently.

PointsBet has aimed to take advantage of this discontent to an extent and position itself as a home for sharps, with no-vig lines on the Super Bowl, and reduced vig on other high-profile events. It’s resulted in a flurry of positive, organic social media coverage from early influencers in the market.

“I come from a bookmaking background,” says Aitken. “I come from Tom Waterhouse where taking big bets and handling risk is in my blood.”

“I’ve been noticing the European approach of banning clients in the market. So, one way we want to differentiate ourselves in the market is by accommodating all our clients, even sharp ones. You can use those sharp clients as a guide to where the line is going and they’re also advocates for the brand. It helps with trust and credibility. We don’t want to be the promo-heavy operator that bans everyone. We want to be a heavy-hitter that finds a way to accommodate everyone.”

That approach obviously requires a trusted trading team, especially in an era when so much pricing comes “off the shelf”, but PointsBet has invested heavily in its “quant team”, as Aitken calls it, and is willing to stand by its prices.

“A lot of competitors are using third-party providers who are trading from Eastern Europe in the middle of the night, and I can understand why they’d rather turn the sharp business away,” saysAitken.

To the points

The need for in-house pricing is also a by-product of the operator’s other USP – points betting (spread betting to Europeans), where profits and losses on an individual bet vary with how right or wrong a bettor was.

Upon launch, many outsiders questioned the logic of positioning such a mechanism at the forefront of the offering, with spread betting largely failing to gain any real traction in Europe by virtue of being too risky, and too difficult to understand for casual bettors.

Aitken however is convinced the US will be different, not least because US sports with the abundance of points compared to soccer are much more suited to the mechanism. Young also suggests that points betting is uniquely suited for the American bettor.

“We see a different psychodynamic among American customers in the way they consume risk,” Young says. “Americans have a higher tolerance for risk generally speaking, and if there’s ever a product that is going to play to that dollar-to-dreams mentality, then this is it.”

Aitken says the average stake in the US is roughly four times that of Australia, while more than half of New Jersey customers have already tried points betting. He tells the story of a grizzled professional bettor who sees betting through the lens of spreadsheets and algorithms, but who places his first points bet for a dollar a second on the first three-point shot in an NBA game.

“He said it was a massive buzz,” Aitken reports. The CEO also points out there are stop-loss mechanisms for bettors to limit their up and downside in a given bet.

Ultimately, the bookmaker is willing to invest so heavily in marketing and promotions because it genuinely believes in its product and the fact that any customers caught in the promo net will ultimately stick around. Perhaps the bigger concern for the operator is its ability to secure access licensing partners in other states around the US.

It has a partner in New York, but other states are question marks at this point, although Young is adamant that PointsBet’s hot start in New Jersey will attract partners in other states. Indeed, PointsBet has barely put a foot wrong in its first few months of activity in the US. It will be fascinating to see if it can keep up the pace in the years to come.