International edition
September 18, 2020

Interview with Seth Young, Chief Innovation Officer

"PointsBet’s ownership of its technology allowed it to start from a place of strength"

"An open and competitive market structure with blended full mobile and retail and an investable business structure is the best scenario for each state considering sports betting legislation and regulation," Mr. Young stated.
United States | 07/31/2020

In an exclusive interview with Yogonet, Mr. Young delved into the Australia-based sportsbook's development in the US, which began immediately after the repeal of PASPA, and explained what makes PointsBet stand out from competitors: "PointsBet is a bookmaker –we don’t outsource risk management and trading–, a high technology company and a marketing company, and that has allowed it to start from a place of strength."

PointsBet made its U.S. debut in 2019 and has since then entered into several partnerships in different states. Could you detail the company's highlights and progress made in terms of market penetration in these states before COVID-19 struck?

Immediately after the repeal of PASPA, PointsBet struck a deal to enter the New Jersey market by partnering with the Meadowlands Racetrack. At the same time, PointsBet struck a deal with Tioga Downs to access New York, pending legal and regulatory approval. Candidly, when I was working at Foxwoods Resort Casino in Connecticut, I was on the other side of the table reviewing prospective partners for the organization. PointsBet stood out to me for a number of reasons; namely the expertise of the team, the ownership of its technology, the point of difference product in PointsBetting, and actual experience booking American sports, given they make up nearly half of the total sports turnover in Australia. The company had no history operating in black or gray markets, no global markets that would restrict its focus on executing in the USA, and full control over its product roadmap. All PointsBet needed was for someone to give the company a chance to access the market, and as you can see the business is trending in a very positive direction.

PointsBet launched a product in New Jersey in January 2019 and very quickly became one of the best and slickest sports betting applications in the state, as well as one of the most popular applications in the state. The company proved it was able to gain and sustain market share in its first jurisdiction, and we have been fortunate to strike partnerships with other forward-looking stakeholders in 12 total states to continue to invest in the USA. We’re now live for mobile betting in New Jersey, Indiana, and Iowa – and we also built our first retail sportsbook in Iowa – and shortly planning to launch both retail and mobile sports betting in Illinois, Colorado, and Michigan. We’ll also be launching our flagship online casino product in Michigan. It’s an exciting time for the business.

What about the different regulatory processes that have been taking place in these states since PASPA's repeal? Has it been more challenging to adapt to them than expected?

I wouldn’t say it has been hard to adapt. We have always had a realistic view of what it takes to be successful in the US market, and an understanding that each state will have its own nuance. A deep understanding of the US market and critical thinking has helped us prepare for each individual state in its own way, and we work with great partners across the country. The largest challenge, speaking generally and stopping short of pointing fingers, is that each state features many different stakeholders with many different viewpoints about how markets should be structured, and some stakeholders may have outsized influence in certain states for any variety of reasons. What we all have seen is that once some stakeholders are confident of their ability to access a market, they appear to lobby heavily to influence legislation and attempt to close that market to other competitors through any variety of tactics that some might call counter-intuitive to recapturing a massive black market. It’s easy to understand why this may occur, but it’s disingenuous and anti-competitive on the best of days.

For our part, our advocacy on a government level is, has been, and will continue to be completely transparent as we champion the facts. Plain and simple, we’d like to see open and competitive markets with investable operational structures like Colorado and New Jersey. The New Jersey market is flourishing, the Colorado market is already outperforming expectations, and data shows that the engagement levels amongst consumers in New Jersey’s competitive marketplace is much higher than those with artificially limited markets or monopolies that are, by all accounts, performing less optimally. So we advocate for reasonable tax rates, reasonable administrative fees, no prohibitions or unnecessary guardrails that our competitors in the black market can take advantage of, and no artificial limitations on the number of stakeholders that have the ability to invest in the market. An open and competitive market structure with blended full mobile and retail and an investable business structure is the best scenario for each state considering sports betting legislation and regulation. It creates the highest levels of direct and indirect economic impact, allows a market to reach its full revenue potential, and invariably drives more revenue to each state for the benefit of public policy initiatives. These are facts that lead to the creation of optimal policy, especially in the context of state budgets needing revenue plugs in the COVID-19 era. Once we’re in a market, do we want to see less competition? Sure, nobody would say no to an opportunity to address an audience with less competition. Competition is good, though. It drives innovation in product, pricing, promotions, and keeps us at the top of our game. We can’t in good faith advocate for anything but an optimal structure as anything else limits the market’s potential.

You have previously mentioned that PointsBet is purposed-made for the U.S. Could you expand on that idea? What differentiates your company's products and services from the competition? In which ways is the US different from Australia or other markets across the globe?

The US market and the Australian market have more in common than they don’t, and PointsBet’s highly experienced team launched the business with the explicit intent to enter the US market. Both countries are sports mad, both countries underwent similar regulatory overhauls to reconvert a prolific black market, and both countries have robust competition. The salient difference is that the US market is fractured across state lines, which makes PointsBet’s ownership of its technology all the more important in the long term. We can control our product roadmap, innovate quickly, and do what makes sense when it makes sense. PointsBet also features its proprietary PointsBetting platform, and we’re the only company to operate this type of betting in both jurisdictions alongside our traditional sports betting product. PointsBetting as a complement to traditional fixed-odds betting allows us the flexibility to offer the most unique ways to bet on American sports of any bookmaker on the planet..

Frankly, PointsBet is a bookmaker – we don’t outsource risk management and trading. We’re also a high technology company and a marketing company. Most other companies do one or two of those things, but not all three. Most global gaming companies have to go through multi-year migrations to have a federated set of technologies. Saying it another way, PointsBet’s initial investment in and subsequent ownership of its technology allowed it to start from a place of strength, as this starting point is the ending point – and then a new starting point – for companies that want to consolidate a sloppy technology profile. The full ownership of technology also allows us to gain economies of scale and efficiency as we grow, which is important. Migrating from a fractured technology profile is a massive challenge and it takes a long time to do it right.

The major point of difference, though, is our focus. We are a pure-play in the United States, and as such, the country has our full attention. The Australian business is performing wonderfully, growing exponentially, and is extremely well managed by a brilliant team that understands the right opportunities to pursue at the right times in interest of growth and sustainability. Things are no different in the USA, but the major difference is that many of our competitors have to worry about a larger global footprint – whether its heavy retail exposure or complicated foreign markets – and all of the things that come with it that draw their attention away from the task at hand. Our pricing and promotions are market-leading, our product is heralded as one of the best in the market, as we’ve grown our national footprint we’ve struck and announced strong partnerships with the likes of the Detroit Tigers, Major League Baseball, the National Basketball Association, created great relationships with brand ambassadors like Allen Iverson, and we’ve generally signaled our intention to compete in a meaningful way. I’ve been saying since the day I joined the business that this is the best company you’ve never heard of, though that’s changed now.

Which were the main differences you have noticed in terms of customer behavior once the coronavirus pandemic struck? Which was the company's strategic approach to adapt to those changes?

Putting aside the fact that we can all agree the coronavirus pandemic has been extremely disruptive and impactful to the everyday lives of people around the world, and looking at it with tunnel vision for the purposes of this question, the lesson we’ve all learned is that mobile betting is convenient, and demand doesn’t disappear in absence of the ability to visit a retail betting location. If the markets aren’t regulated, interested gamblers will look for a convenient option even if it’s in the black market. Mobile operators globally have seen an uptick in business as this demand is captured. For our part, we have been extremely, extremely busy working on product, planning, striking partnerships, and preparing for the relaunch of major sports which will hopefully return some semblance of normalcy to our lives in the USA.

Which do you believe were the company's strengths during the coronavirus lockdown and in which ways was PointsBet able to capitalize on that situation? Is there anything you believe the company will need to adjust if COVID-19 concerns continue?

We have strong leadership, a common vision, and an excellent team focused on executing to the best of their abilities at all times. The safety of our employees is the most important thing to us, and we have been extremely proactive to both ensure that safety and engage our team members through this period. In Australia, we have a strong business booking fixed-odds horse racing which has run throughout the last few months and been a good ballast for the company, and we recently signaled our intentions to help revitalize the horse racing market in the USA through an agreement with BetMakers, pending all approvals. We’re looking straight ahead.

Could you summarize PointsBet's plans and forecasts for what is left of 2020 and next year

We’re planning to roll out more states, roll out more products, grow our team, and continue to successfully build our brand’s awareness. I can summarize our plans in two words: Stay Sharp.

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