The share price of online bookmaker, Pointsbet Holdings Ltd (ASX: PBH) took a 9.25% fall yesterday despite no obvious announcements made by the company.
This means Pointsbet’s valuation is now roughly 30% lower than it was at the start of the year. Still, this isn’t too bad considering the company’s shares have still delivered a return of over 800% over the last 12 months.
Here’s what you need to know.
PBH share price
What’s sent the PBH share price down?
The recent downtrend could be partly explained by a research note from Deutsche Bank that suggested optimism around the legalisation of mobile sports betting in New York was declining.
The decision will be made as part of the New York state budget later this week. Sen. Joseph Addabbo said tensions between legislators and Governor Andrew Cuomo have resulted in the decision going from almost a certainty to around 50% chance.
Sports betting has been legal in New York since 2019, but wagering through online and mobile platforms is what will hopefully be proposed in the coming state budget.
It doesn’t seem as though Pointsbet has been actively seeking to enter the New York betting market at the moment. Although it has hinted towards the idea in previous announcements, which estimated the opportunity in New York to be around $1.3 billion by 2023.
How’s the rest of the business travelling?
Pointsbet has continued to expand into other US states over the last six months, including Illinois Colorado and Michigan, with New Jersey expected to be next in line.
Online betting has continued to be a popular COVID-19 pastime, with active clients across the Pointsbet platform in Australia and the US up 77% and 222%, respectively over the last six months.
The group’s net loss for the period came in at $85.6 million, reflecting the significant reinvestment made back into the company to support its international expansion strategy.
To read more about Pointsbet’s H1 FY21 results, click here.
Summary
It’s yet to be seen how the legislation around mobile betting in New York will affect Pointsbet’s growth strategy.
Keeping in mind that it might be legalised eventually at some point in the future, this may mean what happens in the next week or so might not determine the long-term success of the company.
It’s also worth noting the potential growth opportunity in the remaining US states as well as Canada, so there might be other avenues for potential upside.
For more ASX share ideas, click here to read: ASX tech shares were hit hard yesterday…I’d happily buy these 3: JIN & XRO & ALU.
