PointsBet Holdings Limited

Good morning. I would like to thank you for joining this call for the PointsBet Holdings Limited Full Year 2021 results.

This is Sam Swanell, Group CEO; and I'm joined today by our CFO, Andrew Mellor; together with U.S. CEO, Johnny Aitken; and U.S.

Chief Commercial Officer, Eric Foote; who are joining from our Denver headquarters. Today, we will talk to our investor presentation which was lodged with the ASX this morning together with our full year financial report.

All figures in this presentation are in Australian dollars, unless otherwise stated. Turning to Slide 4; since inception, PointsBet's Board and management have been working towards establishing the key building blocks that have put us in a strong position we are in today to pursue the expansion of the North American sports betting and iGaming opportunity.

The pieces are now in place as we look towards FY '22 and beyond. Turning to Slide 5; FY '21 has been full of achievements, a few of which I will now detail.

We entered into a transformational five-year media partnership with NBCUniversal, providing PointsBet with deep access and integration into NBCUniversal's world-leading broadcast and digital assets. We achieved strong strategic and operating momentum in FY '21 in both our Australian and U.S.

businesses, with the Australian Trading business achieving successive financial years of EBITDA positivity and the U.S. business achieving strong market share as well as in gross win, net win and customer acquisition.

The successful completion of two strategic acquisitions, being Banach Technology and Premier Turf Club, both accelerating the development of our unique in-house technology platform and product offering. Established a strong pipeline of growth into FY '22 and beyond with the expectation of launching in 11 U.S.

states as well as Ontario, Canada by the end of calendar year 2022. Successfully raising capital to take advantage of this growth pipeline.

Additionally, we've attracted outstanding brand ambassadors, including Paige Spiranac, Drew Brees, Shaquille O'Neal and Devin Hester. We were appointed as one of only seven official sports betting partners of the NFL, making PointsBet an authorized partner for the four major U.S.

pro sports leagues. We've also entered into strategic partnerships with a host of NBA, MLB, NFL and NHL teams across the U.S.

And we've assembled a highly experienced iGaming team and built an in-house proprietary iGaming platform and administrative tools which have now been successfully launched in two U.S. states, Michigan and New Jersey.

Turning to Slide 6; the FY '21 performance of the global trading businesses as compared to the prior corresponding period of FY '20, to be referred to as the PCP, was as follows: sports betting turnover was up 228% at $3.78 billion. Sports betting gross win was up 201% at $353.1 million.

And total net win was up 154% at $208.5 million. As can be seen on Slide 7; we continue to rapidly grow our client base.

In Australia, cash active clients were up 117% compared to the 12 months to June 30, 2020. In the U.S., cash active clients were up 661% compared to the 12 months to June 30, 2020.

I will now hand over to Andrew Mellor to walk through our financial results.

Thank you, Sam. Good evening to all in the U.S.

and good morning to those in Australia. Now, turning to Slide 9.

I'll be talking to our normalized results. However, there is a summary of our statutory results on Slide 36 and a reconciliation of the normalized results to the statutory results included in the review of operations and on Slide 37 of this presentation.

For the reporting period, PointsBet reported net revenue of $194.7 million, a growth of 159% versus the PCP. Gross profit of $87.6 million represented growth of 129% over the PCP.

The group sales and marketing expense of $170.7 million for the year, with Australia accounted for $51.4 million and the U.S. accounting for $19.2 million.

This increased marketing investment assisted with the delivery of 196,000 cash active clients in Australia and 159,000 cash active clients in the U.S. as at the 30th of June '21.

The U.S. expansion strategy requires upfront marketing investment to establish and grow market share and drive revenue growth.

And the U.S. marketing expense is expected to continue to increase as our state footprint continues to expand.

Employee benefits expense increased over the reporting period in both Australia and the U.S. Head count as at the 30th of June '21 grew to 431, up 101% from the June 30, 2020.

Product and technology expenses increased over the reporting period. During FY '21, the company was operational in Australia and six U.S.

states, being New Jersey, Iowa, Indiana, Illinois, Colorado and Michigan. And as a result, our betting volumes have increased as have our costs associated with developing, hosting, operating and securing our technology and data platforms.

The normalized EBITDA loss for the group was $156.1 million as the company continued to invest in the business to scale in the U.S. and within the technology department as well as growing our U.S.

client base across the six operational states. Turning to Slide 10; I'll now speak to our business segments.

Further details can be seen in Note 5 of our consolidated financial statements. On a statutory basis, the Australian Trading business segment recorded net revenue of $150.7 million and an EBITDA of $9.2 million in the reporting period compared to the EBITDA of $6.9 million in the PCP.

This result was extremely pleasing given we increased the Australian marketing investment by 156% compared to FY '20. On a statutory basis, the U.S.

segment recorded net revenue of $42.3 million and an EBITDA loss of $149.6 million in the reporting period. The loss was driven firstly by the U.S.

marketing expense of $119.2 million as we expanded operations across six U.S. states; and secondly, by more than doubling the head count of our U.S.

operational team. The Technology segment derives it's revenue from licensing fees charged to the Australian Trading business and the group subsidiaries in the U.S.

The Technology segment recorded intersegment revenue of $19.5 million. Please note, this revenue is eliminated in the company's consolidated results.

In addition, the Technology segment recorded B2B revenues of $1.6 million post the acquisition of Banach Technology in April 2021. On a statutory basis, the EBITDA for the Technology segment for the year ended 30th of June '21 was a loss of $9.6 million compared to the PCP loss of $2.9 million.

Corporate administrative costs are costs that cannot be readily allocated to individual operating segments. Statutory EBITDA for the corporate segment for the year ended 30 June '21 was a loss of $12.4 million compared to a PCP loss of $5.5 million.

The increase was largely driven by increase in listed company costs, an increase in professional services cost associated with the NBC transaction, the September 2020 capital raise, the acquisition of Banach Technology and Premier Turf Club as well as increased employment benefits due to the increased head count of corporate staff. The statutory EBITDA loss for the group was $162.3 million for the reporting period.

After accounting for the impairment loss of $1.3 million, income tax expense of positive $0.6 million, net finance costs of $3.2 million, net foreign exchange losses of $8.7 million and depreciation and amortization of $12.2 million, the statutory loss for the year was $187.1 million. Turning to Slide 11; the balance sheet was strengthened over the reporting period, with the group having net assets of $448 million as at the 30th of June '21.

Net asset movements are driven primarily by cash received upon the completion of the $353.2 million capital raise in September 2020; prepayments, including prepayments for future committed marketing spend; noncurrent financial liability relating to the fair value of the debt component of the share options issued as part of the NBCUniversal transaction. The $76.1 million includes the notional interest charge on the financial liability for the period; investment in U.S.

licenses and market access; identifiable intangible assets and goodwill recognized from the acquisitions completed during the year, being Banach Technology Limited and Premier Turf Club LLC; and the continued investment in the betting platform through the capitalization of relevant technology and product employee costs. Turning to Slide 12; I will briefly touch on the cash flows as these have previously been disclosed and detailed as part of our quarterly 4C reporting applications in July.

Net cash outflows from operating activities, excluding the movements in player cash accounts, for the year ending 30 June '21 was $138.8 million. Net cash outflows from investing activities was $77.8 million.

Net cash inflow from financing activities was $339.4 million. I will now provide an overview of the Australian Trading business.

Turning to Slide 14; the Australian Trading business recorded a net win of $166.1 million, up 121% from the PCP, with a net win margin of 8.4%. The Australian Trading business has seen improvement across a number of key KPIs, particularly with respect to customers continuing to trend towards higher-margin multi-products.

Also improvements in marketing tech tools and the refreshed brand campaign assisted with acquisition and retention compared to the PCP. FY '21 turnover was just shy of $2 billion, up 140% compared to the PCP.

We're very pleased that the Australian Trading business recorded a statutory EBITDA of $9.2 million for the reporting period, an increase from the $6.9 million on FY '20. As can be seen on Slide 15; in just three years since launch in Australia, we have achieved meaningful share in a competitive and growing market.

We are extremely pleased with the performance of the Australian Trading business across the full financial year. And this strong momentum sets us up very well for FY '22 and in particular, the coming football finals and Spring Carnival beginning in September.

Our ability to operate a growing, profitable business in the advanced and competitive Australian market, backed by continually improving product and growing brand recognition, provides confidence in the continued execution of our U.S. strategy.

I'll now hand over to Johnny Aitken, our U.S. CEO, to speak to the U.S.

results.

Thank you, Andy. Now turning to Slide 17.

Our execution strategy is clear. We will continue to invest to become a Top 5 player targeting 10% sports betting market share in key U.S.

jurisdictions. As can be seen on this slide, our strategy is built around three key pillars.

Firstly, a market-leading team. We have put together a world-class, highly experienced team across all key areas by -- recognized for excellence in strategy and execution.

We continue to invest in critical technology, product and strategic functions in addition to strengthening core operational departments such as sports book trading, iGaming and customer retention management. Secondly, a market-leading product.

As we've previously said, product will win as the market matures. Over the reporting period, we've built up additional strength in this area, including the acquisition of Banach Technology now called PointsBet Europe.

The PointsBet Europe team will deliver market-leading in-play, pregame and player products across all key U.S. and global sports, driving client engagement through better product, superior uptime of markets and improved gross win margins.

Thirdly, growing brand awareness. We continue to execute strategic and disciplined marketing campaigns to accelerate client growth and brand awareness and trust.

Being the official sports betting partner of NBC Sports, together with our recent appointment as one of only seven approved sports betting operators of the National Football League and signing Hall of Fame down, quarterback Drew Brees as a national brand ambassador, provides outstanding opportunities for us to create innovative integrations and customer engagement to be a leading brand throughout the NFL season. Turning to Slide 19; I'm very proud of what our team has achieved in terms of market share today.

To have delivered just shy of 8% online handle market share in Q4 in both Illinois and New Jersey, states with a combined adult population of circa 17 million people, as well as delivering Q4 net win margins of 3.9% and 4.5%, respectively, is extremely pleasing and indicative of the experience the PointsBet team possesses in the online sports betting space. I'm also pleased with the market share trend in the other states and we remain focused on achieving 10% market share over time.

Now, turning to the full year performance on Slide 20. The U.S.

business achieved a sports betting gross win of $95.8 million at a gross win margin of 5.3% compared to gross win of $16.5 million in the PCP with a sports betting net win of $40.9 million at a net win margin of 2.3% compared to net win of $7 million for the PCP. In addition, the U.S.

business achieved iGaming net win of $1.5 million. This delivered an overall U.S.

net win of $42.3 million for the year. The trading results of the individual states can be seen in the Appendix on Slide 38 and is detailed in our quarterly results in July.

As I look back over the last 12 months, the progress our team has made to further PointsBet growth in the U.S. has been outstanding, highlighted by launching sports betting in four new U.S.

states, Illinois, Colorado, Michigan and West Virginia; launching iGaming in two states, Michigan and New Jersey; gaining new market access in three states; being appointed as official sports betting partner of both the NHL and NFL; making PointsBet an authorized partner before major U.S. pro sports leagues; signing key partnership arrangements with the NBA, NHL, MLB and NFL teams; appointing significant brand ambassadors with a global presidents -- presence, I should say, in Paige Spiranac and Drew Brees; and doubling our U.S.

operational staff, most of whom are headquartered with me in our Denver, Colorado headquarters. As announced yesterday, our partner in Arizona, Cliff Castle Casino Hotel, was not awarded a license by the Arizona Department of Gaming.

Whilst we were surprised and disappointed, we continue to assess the market access opportunities in Arizona. Before I touch on iGaming, I would also like to make some comments on the 2021 Super Bowl performance which are strong across all areas and gives us extreme confidence in launching the upcoming NFL season as one of only seven official sports betting partners of the NFL and backed by world-class NBC Sports assets.

We were delighted with how the proprietary platform performed, noting that some of our key competitors experienced technical issues and customer delays on the biggest sporting day on the U.S. calendar.

On step-by comparison saw no major outages or system issues in the lead-up or during the game. PointsBet also offered the most markets on the Super Bowl.

As an example, 15 minutes before kickoff, PointsBet was offering 765 markets, over 200 more than our closest competitor. Our depth and breadth of markets is a testament to our platform capabilities and expert internal trading teams.

This will only increase this year with the benefits of our acquisition of Banach Technology. Turning to Slide 21; PointsBet has assembled a highly experienced iGaming team which has built an in-house proprietary iGaming platform and administrative tools, with Vice President of Online Casino Revenue, Aaron O'Sullivan, formerly of Bet365; and President of Technology and Products, Manjit Gombra Singh, formerly of Aristocrat and IGT, leading the strategy and execution of iGaming.

Owning and controlling an in-house iGaming technology stack will become an increasingly important strategic advantage, with PointsBet's mandate always being to provide a fast and immersive experience across all our customer touch points. The company has licensed third-party iGaming content from premium content suppliers, including live dealer solutions to match the speed and ease of use customers receive.

On May 5, 2021, PointsBet launched iGaming operations in Michigan. PointsBet is currently offering 30 slot, video poker and table games.

The company will bolster this offering in H1 FY '22 with the offering of additional strategically selected slot games, live dealer table games and other innovative initiatives. Since the launch, PointsBet has had no technical issues related to iGaming.

PointsBet launched iGaming in New Jersey on the July 23, 2021, with plans to launch in West Virginia in H1 FY '22 and Pennsylvania and Ontario in H2 FY '22. PointsBet has also secured iGaming access in Ohio, Indiana, Missouri, Louisiana and Iowa pending the passing of enabling legislation.

We're pleased with our performance to date and are starting to see some informative trends in player behavior, notably 40% of Michigan cash active clients have placed an iGaming bet since launch, with 71% of all iGaming players having placed an in-play sports wager, further validating our view that having a superior in-play sports betting product will enhance the cross-sell to iGaming. I will now hand to Eric Foote, our U.S.

Chief Commercial Officer, with me here in Denver for some comments on our NBC partnership.

Thank you, Johnny. Turning to Slide 24.

I would now like to provide an update on the first year of our NBC partnership and how we are planning to unlock further opportunities in year 2. As previously noted, year one of our partnership was focused on utilizing the NBC assets to build the PointsBet brand with a new and expanding audience.

As set out on this slide, this has been primarily achieved through four key areas: Firstly, we maximized our in-state presence through premium local placements. This included premium commercial inventory in addition to story lines and live lines, integrations across MLB, NBA and NHL regional sports network coverage in Philadelphia, Chicago, New York and Washington, D.C., leveraging PointsBet odds and data while also featuring targeted sign-up offers.

Secondly, PointsBet leveraged key national NBC platforms to reach previously unattainable audiences. As an example, PointsBet was fully integrated into the English Premier League and NHL studio shows on NBC Sports Network with odd features informing the audience of betting markets and odds relevance to the upcoming programming.

Thirdly, we leveraged NBC data for direct leads into our acquisition funnel. As of August 26, PointsBet has received over 353,000 qualified leads obtained upon users signing up for NBC's free-to-play sports game predictor.

To put this into perspective, the potential of the acquisition funnel stems from over 1.7 million app downloads, resulting in over 29.3 million contest entries. And fourthly, the NBC Sports digital platforms, including but not limited to, Predictor, nbcsports.com, GolfNow and NBC Sports EDGE, accounted for a combined estimated 114.5 million advertising impressions across PointsBet's operational states, facilitating an ever-present and targeted reminder of the PointsBet brand.

In addition, PointsBet was able to leverage the NBC Sports overall database to deliver dedicated emails to various consumer segments. Turning to Slide 25; while leveraging the NBC assets, we have also been able to deliver cutting-edge experiences for our consumers while creating numerous firsts for both our brands and the sports betting industry.

In February 2021, PointsBet launched the Waste Management Phoenix Open BetCast airing on Peacock, a first-ever betting theme simulcast for a PGA Tour event that focus PointsBet odds, sign-up offers in a seamless integration of the PointsBet trading and editorial teams across four days of golf coverage. Given the success of the program, it was fast followed with a localized version of a BetCast for a Chicago Bulls/Charlotte Hornets game aired in April on NBC Sports in the Chicago market.

We also launched voice-enabled, brand-focused commercial advertisements on Effectv, Comcast's advanced targeting solution for television. The advertisements featured brand ambassadors, Paige Spiranac and Allen Iverson, in addition to utilizing Chicago White Sox Legend and NBC Sports talent, Ozzie Guillen.

Lastly, we ran product-focused advertisements featuring Sara Perlman during MLB games, while PointsBet's Head of Trading, Jay Croucher and Teddy Greenstein, PointsBet's Senior Editor, made regular appearances across Golf Channel studio shows, marking the first-ever inclusion of betting experts on Golf Channel coverage. Turning to Slide 26; we are excited to enter into year two of the partnership.

While we are extremely happy with the progress made in year 1, we are poised to deliver future growth and unlock new opportunities by enhancing our in-state presence through premium local placements, increasing national integration and the opportunity to engage with new and existing audiences at scale as we launch in new states and leverage our recent appointment as an authorized sports betting partner of the NFL. Turning to Slide 27; as can be seen on this slide, PointsBet is ready for the NFL season.

And as an authorized NFL partner, we are afforded the opportunity to advertise in and around NFL games. A multi-touch approach, utilizing the most premium properties across NBC, our strategy will ensure we are reaching NFL fans throughout the week and on Sundays.

Commercial units featuring Drew Brees are planned across our key markets. Together with video and display advertising inventory across the entirety of the NBC Sports digital properties, this allows us to reach our target audience at scale.

NBC Sports EDGE continues to be a key NBC Sports digital property that attracts bettors looking for news and information. With the Bet the Edge podcast hosted by Sara Perlman and other PointsBet talent, we will continue to educate the audience on our available NFL markets while promoting the PointsBet brand.

Finally, dedicated email campaigns will reach prospective users with relevant sign-up offers and relative promotions. We will reach bettors in multiple ways throughout the NFL season.

It begins with Predictor as customers select their picks across NFL Sunday Night 7 as our realtime odds and promotions will be displayed. Whether they are watching their home team's pregame or post-game show in Philadelphia, Washington, D.C.

or Chicago, PointsBet will reach our audience via odds integration and advertising units. This will be followed by our weekly national integration into football night in America during Sunday Night Football which boasts an average audience of 17 million viewers.

In addition, we will launch in-game Sunday Night Football advertising commercials in key and select markets. The above elements will be critical in allowing us to reach audiences at scale.

In closing, our enhanced odds integration into the Sunday Night Football post-game show on Peacock will conclude the day's games and provide a look ahead to the following week's slate of games. I will now hand back to Sam.

Thank you, Eric. Turning to Slide 31; from day one, we have said that product will win.

Ultimately, the entire product experience will be the differentiator between those operators who succeed and those who do not. We have built a global product and technology team of over 200 people who have developed and continue to refine our proprietary in-house platform both in the areas of sports betting and iGaming.

Owning our own tech facilitates complete control of our product road map. Importantly, it increases the speed of innovation and execution across product development, testing, regulatory approvals and deployment.

Ultimately, this allows better and more reliable products to reach our customers faster. It further provides confidence in the speed of use and reliability across the important peak low periods such as the Spring Racing Carnival in Australia culminating in the Melbourne Cup and the NFL season in the United States culminating with the Super Bowl.

With one team -- with a one-team global approach across North America, Europe and Australasia, we can leverage the learnings and key product developments into the U.S. and Canadian markets.

Importantly, owning our own tech also allows us to customize and localize these products to suit the local jurisdictions. Included in our FY '21 enhancements have been the developments we have made over the past year in pricing and risk management as well as targeted investment in our marketing tech capabilities, allowing us to reach the customer across numerous touch points with a personalized service and appealing offers.

Turning to Slide 32; in March this year, PointsBet announced the acquisition of Banach Technology now known as PointsBet Europe. Through highly sophisticated risk management algorithms and deep trading experience, this technology will allow PointsBet to optimize achieved margins and offer superior value to our customers.

PointsBet Europe's proprietary models for the major U.S. sports and others such as EPL will provide PointsBet with a clear differentiation from operators which engage third-party off-the-self pricing models, leading to more customer engagement through increased and better-priced markets.

This acquisition will position PointsBet as a leader of in-play sports wagering in the United States, just as in-play wagering is expected to grow exponentially. Within the next three years, in-play wagering is expected to represent circa 75% of all sports wagering in the United States.

This acquisition accelerates PointsBet's technology road map and places the company in a prime position to take advantage of this growth in sports betting activity in the United States. Turning to Slide 34; I would now like to make a few comments on our global commitment to responsible gambling.

PointsBet endorses the principle of informed choice which is aimed at empowering customers to make informed decisions and exercise choice regarding their gambling expenditure. PointsBet's commitment to responsible gambling is demonstrated through it's wide range of responsible gambling initiatives and tools, some of which go beyond those obligations imposed by regulators in the jurisdictions in which we operate.

Both, Australia and the United States, have dedicated responsible gambling offices and supporting teams. We have also invested in improvements in our systems and automations to detect red flag behaviors which have allowed a more fact-based and individualized approach to responsible gambling with our global customers.

These system investments have also led to improvements in fraud and anti-money laundering risk detection which facilitates compliance with our regulatory obligations and also reduces revenue leakage. PointsBet has a policy that all customer-facing employees receive annual responsible gambling training.

Ultimately, we believe this is an important area for long-term sustainability of the industry and we take our obligations in the area very seriously. In conclusion, the pieces are now in place as we look towards FY '22 and beyond.

In Australia, the investment made in marketing in H2 FY '21 off the back of the refreshed brand campaign featuring Shaquille O'Neal has continued into FY '22 and has PointsBet positioned for it's biggest and most successful spring ever. In the U.S., we're excited by the position we have put ourselves in as we approach the 2021 NFL season launch as an official sports betting partner of the NFL, supported by the strategic NBC assets.

And finally, we are looking forward to preparing for the Canadian opportunity under the leadership of CEO, Scott Vanderwel, as we target a launch in Ontario. I'm happy to take questions.

Thank you.

Hi, Sam. Thanks.

Just one for me, actually, on the New York licensing opportunity. I appreciate you're in a live process.

But what are you comfortable to say in terms of the consortium you're in and what you think that brings to the table, if you're able to say at all?

Yes. Good day, Rohan.

I think we can comment on what's been made public, obviously and I think what's been made public is that we are in a very strong group. Obviously, with Rush Street, Caesars, Wynn, Genting, the Oneida Tribe, the Mohawk Tribe as well as the media companies attached to us.

So ESPN with Caesars, NBC with PointsBet and SNI, the local RSN in the New York area that PointsBet has. So, I think that group is public and I think anyone would agree that that's a very strong group to be associated with.

So, we're confident and hopeful of our progress through the process.

Thanks. And maybe just one more.

On the NFL partnership, I take on board the comments on Slide 27. But what are the parts of that partnership that have got you most excited and most confident that you can get the desired returns on that?

Yes, it's really that it opens up the advertising around the most popular betting sport, the biggest sport in the U.S., Rohan. So we believe that to acquire clients, to get the brand out there, we need to be in front of that audience.

And if you're not an approved partner of the NFL, you're not advertising around those assets and getting access to those clients. So it's a really big step.

Obviously, only seven books have approved -- have received that approval. We approach everything in a disciplined manner.

So we don't just go for something because it looks good on the bags. This will be a very effective marketing outcome for us.

And those that are not advertising around the NFL, we believe, will be -- will suffer for it.

Thanks, Sam.

Okay. Can you hear me?

All good, Joe.

All right, all right. Thanks very much for taking the call -- or taking the question here.

I wanted to ask you, Arizona, there are 20 licenses. We can argue maybe there are seven kind of, say, real operators, at least those that can achieve some level of scale.

I guess the question is how quickly you might be able to pivot given, say, the decision with your current market access partner.

Yes. I think the first thing -- obviously, when it comes to market access, we approach it very strategically.

I think our record in getting into states at the right time and most importantly, under the right terms. And so when -- we understood, obviously, the landscape in Arizona very, very well.

When it came to partnering with Cliff Castle, they're seen as a very strong tribe. We're seen as a very strong operator.

We fully expected that as part of the 10 licenses, that we would be holding one of those licenses. So it's not an indication that we didn't approach the state of Arizona with the same strategic oversight that we approach all states or opportunities.

We certainly did. So fair to say it was a bit of a surprise but we then look for other opportunities.

So look, I'm not going to sit here and say -- if the market goes forward and is operating and bets are being taken in early to mid-September as has been sort of planned, well, that might not be possible for PointsBet anymore but we'll consider -- we'll keep looking for opportunities. But again, it has to be under the right terms, we're not going to commit to something that financially is irresponsible.

We had the right deal with Cliff Castle and we believe we have the right partner. We'll now have a look around and see how that all plays out.

Understood. And then secondly; wondering, Sam or Johnny, if you can comment maybe on how quickly one would expect, say, the number of in-play bets would -- how quickly you can start increasing the number of bets that you offer in the new U.S.

sports calendar, whether it be the NFL or college football or so forth. Like how quickly you can move that dial.

You just did the acquisition. So just kind of wondering how quickly you can increase the number of products in a given game.

Yes, understood. Yes, look we'll start to get the benefits from the NFL -- start of the NFL season.

But to be honest, Joe, this is a never-ending cycle. We're trying to make the bettor -- the bet type more fun greater, bet types, greater accuracy.

We hope to lean in more and more with NBC in the in-play space and innovate with them as well. But we'll start to get the benefits from the PointsBet Europe team for the NFL season and NBA and college and obviously, EPL and others as well, as I mentioned.

So, it's not a Big Bang where, overnight, you click your fingers and you have the full impact that you -- where you want to end up. This will be our area of focus.

This is where we want to play. Sports betting-led operators will lead market share in the U.S.

market. So if you believe that sports betting operators will lead market share and then you believe that 75% of sports bets will be placed in-play, it's pretty clear that if you're a product -- a company like we are, that that's the space where you want to have a top-notch product.

And so, that's why we made the Banach acquisition. It was already a focus for our business.

Obviously, in-play from the time we entered the U.S. market.

But we'll have benefits and it'll be an ever-improving product for this NFL season. But it'll be gradual.

You're not going to see going -- or going to go, wow, overnight. It'll just change across all sports.

Each sport is different. They have different nuances to each sport.

But as we've spoken about, the key things are depth and breadth of markets. So -- and including micro markets and player props which help with cash out at pregame bets.

But then if you're going to offer those depth and breadth of markets, you need to be able to ensure that you can do it for high uptime. There's no point having a deep number of markets but you're suspending them all the time.

And so, we value up -- or balance up between all the things that are important. But even down to the -- of resulting of bets and speed of bet acceptance.

It's not all just about the risk management trading technologies, the other elements around the betting experience as well. So we understand what the bettor wants from an in-play experience.

And the betting guys, they started this at Flutter. They were there at Flutter.

They built the early models. They're now on board with PointsBet and fully motivated to lead us to being the market leader in in-play in the U.S.

market. And we plan on delivering that.

If we do, do that, it goes a long way to ensuring our success in the U.S. market.

Understood. Thanks very much.

Well, thank you. Good morning Sam, Andy and Johnny.

Just a quick question on Slide 21; thanks for the disclosure on some of those iGaming metrics. Just came to get a sense for how, I suppose, July was tracking for Michigan and then how the progress has been so far since you've launched in New Jersey.

And if you could perhaps make any comments around retention or customer acquisition cost potentially coming down as a result of having those dual product offerings in these two states.

Yes. I think one thing probably worth pointing out is what we launched in Michigan was a single app experience.

So you're on the one app and you have iGaming and sports betting. What we launched in New Jersey was actually a separate app experience, deep links.

So it feels like you're pretty much on a single experience. And that's a path that some of our competitors have already gone down themselves in terms of a separate app and it's a path that we're exploring as well because you do like to separate out the content somewhat between sports and iGaming.

So, the great thing is in launching our first two states, we've produced both models, a single app experience and a separate app experience and all the deep linking that needs to occur between that. And as Johnny said, we haven't had any issues.

It is very early stage. We recognize that 30 games is a long way off the market.

But again, we -- we've taken the time to build the platform ourselves. We've taken the time to get to this point.

We want to develop a strategy that is the right one for long term that will maximize margins, give us the greatest ownership over our road map. But yes, the statistics so far are pretty encouraging.

I mean I think everyone can appreciate that adding an iGaming product enhances your lifetime value of the client. Yes, there's a degree of cannibalization.

You don't just add it completely on top of whatever your sports betting revenue is on but the net-net is a positive one. So we're still -- we're encouraged by the cross-sell.

We're encouraged by the inquisitiveness of our clients to try the iGaming product. It's producing what you'd expect it to produce from a revenue perspective and increasing monthly revenues per active players and the like.

So -- but apart from that, it's still very early on. And when we release something, we want what we released to be top notch and for it to work and then we'll keep adding to it.

There's no point in rushing things out that are substandard or not reliable, not fast and easy to use, et cetera. So we will move more quickly.

We're going to launch live dealers, will launch more licensed products. And by the end of the year, we'll have iterated a lot.

So a lot of the data, obviously, that comes back from the clients that are using it, we analyze that data. That's part of optimizing your iGaming offering.

But the other thing about iGaming, even though it's not a core part of our strategy, our strategy is to acquire clients through the mass appeal of sports betting, that's where you get the greatest scale, as I spoke about before. And then to cross sell them across to iGaming.

We want to have an iGaming -- a very, very credible and strong iGaming product. And even without really trying to, we are acquiring clients directly to the iGaming product.

So we haven't put anything really out there to do that but you do naturally get some clients come play directly to the iGaming. They may then go across and play sport or they may not.

They may just stick to iGaming. So it does open up another acquisition channel and another segment of the market for us to consider and dip our toe into.

That's fantastic. Thanks, Sam.

That's all for me.

Thanks, Des.

Good morning and good afternoon. Just a couple of questions around the financials.

Maybe Andy, first of all, on your second half '21 gross profit margin would still have been around 50%. Is that around the level we should expect going forward?

Hi Sacha, thanks for the question. I think gross profit margins for the year fell slightly from FY '20.

In FY '20, we had 51% for the group. FY '21, 45%.

And I think what we can say is that the Australian gross profit margins were fairly consistent year-on-year. But as the U.S.

is moving through that growth phase, then the U.S. gross profit margins were lower than Australia -- significantly lower than Australia.

And therefore, that sort of brought down that gross profit margin from the group basis as the U.S., I think, now represents about 20% of our revenue. But I think the focus for FY '22 is obviously to keep the consistency in the Australian gross profit margins and to grow U.S.

gross profit margins from their current levels.

Okay, great. And how should we think about the marketing spend going forward?

So you spent $77 million in the second half and you were live in I think six states for most of the half. You're adding I think 11 jurisdictions over the next 15 to 18 months.

Can you maybe just talk through a little bit about your strategy of spending in new markets? And if you were to just stay in those six months or the full -- so if you were to just stay in those six markets for the full 12-month period, would we simply double the $77 million?

I'll grab that one, Andy. Yes.

So if -- part of our spend, Sacha, is let's call it here and now into the six states that we're operating in but some of the state spending is forward-looking. And for example, the Sunday night football pregame show that we're going to do with NBC this football season which is always the most watched show on TV, that's a national commitment.

And in some ways, when you're live in 7 states or 8, 9, 10, 11, 12, you're not just doing that for the here and now maximizing of short-term acquisition. You're also doing it with some forward-looking intent to build the brand.

I mean, similarly, when it comes to states that we expect to be launching in, we do -- we are prepared to put some forward-looking spend to help close that brand gap on some of our competitors. So what I would say is that, yes, generally speaking, the amount of marketing that we spent in the six live states in FY '21 will be very similar to FY '22.

But there is an element of sort of away from that. And then, you sort of understand how we think about new states that are coming online.

Our aim is to spend an amount that we think can have us working up to 10% overtime. So those new states, from an acquisition perspective, will be additional spend.

Yes, got it. That makes sense.

Maybe just one last question, either yourself or Eric. And just you sort of spoke about a few channels through which you're receiving leads and driving impressions from the NBC partnership.

Can you provide any color about which of those channels you think are delivering the most new active customers for the U.S. business?

Eric, I'll throw that to you.

Yes, no problem. A variety of leads, I think when you think of the acquisition funnel, we're starting with the linear platforms to do the brand building which has been quite successful.

As we drop down to their digital platforms, the ones that stick out, obviously, the Predictor platform, the free-to-play which we mentioned a significant number of leads, not only in active states but in states that we're heading to in the near future. I would say the close second would be their golf products, specifically GolfNow.

It's the largest online tee-time marketplace in the world. So we're heavily dialed into that database and working on loyalty rewards programs.

And then, last would be their gaming platform or their -- the information on new service which is now called NBC Sports EDGE. So we're heavily integrated into that, not only from a talent perspective on the editorial but also from a data odds analysis and information.

So, I'll probably say those are one, two, three as we look at the digital assets that we're utilizing with NBC.

Okay, that's great. Very helpful.

Thank you.

Yes, thanks. And hi, guys.

A couple of questions from me. Sam, can I revisit Arizona?

I just want to maybe see if I can get some more specifics there. Does your arrangement with Cliff Castle, now that the license hasn't been granted, are you now free to go and find other partners?

Or are you still bound to an arrangement with Cliff Castle?

Yes. If Cliff Castle is unsuccessful in obtaining a license, yes, we are free to pursue other opportunities.

I would note that Cliff Castle have put out a press release sort of in broad terms indicating that they're considering their options. But yes, in broad terms, to answer your question, we have the right if they are unsuccessful to pursue other avenues.

Has it been concluded that they haven't been successful? Or is that still up in the air?

No. As per the official process, when the Arizona Department of Gaming put out a release, I think it falls on the weekend, they were not included in that.

But I direct you probably to their release, Larry, given it's focused there, that matter.

Okay, great. And the other question I had is, I think there were three tribes or so that didn't seem to have partners.

Is that the avenue of market access is maybe beginning conversations with those tribes?

I think there's a few things to keep in mind. I mean I think whether it's the sports team licenses or the tribal licenses, there were some gaps in terms of what's the Arizona release and we're sort of running those down.

I mean, obviously, leading up to choosing to go with Cliff Castle, we engage with a number of parties. So we do have various relationships in the state and various parties that we've spoken to on the journey.

So, yes. So logically, they are the ones.

I'd also note that there's a maximum of 20 licenses allowed under the legislation and only 18 have been handed out. So there is some room for future licenses.

Yes, okay. That's what I was going to ask.

All right. And I guess one of the things I'm starting to realize is, yes, I agree with your comment about that product will ultimately win but it appears like brand is going to give some of those companies that don't have superior product to kind of catch up.

Let's take a Caesars, for example. So I'm just wondering, I saw your unaided brand awareness there.

My question, I guess, would be, when I think about PointsBet in Australia and it's brand presence relative to it's market share, can you sort of describe, let's say, PointsBet's brand presence in Illinois and New Jersey relative to it's market share? I don't know if you have sort of awareness stats on that.

Is it commensurate with the market share?

It's a good question. I mean I would say that, obviously, brand awareness plays a role when it comes to marketing efficiency.

All other things being equal, if you have stronger brand awareness and you're executing exactly the same, you're going to get a better result. That's why a part of a logical brand mix, we do make that investment in brand to make our performance channels more efficient over time.

And we believe and it's reflected in our brand awareness strategies, that, for example, in Illinois, where we do have, let's call it, the strongest brand building assets because we have that Chicago RSN, as we've spoken about and we're integrated in. And we've really -- we're ahead of not just of awareness but trust.

That we being associated with that RSN, that leads to greater marketing efficiencies and has been helpful in us winning market share. So I think Illinois, definitely.

And obviously, from an Illinois perspective, we got there reasonably quickly. New Jersey, yes.

But we are spending some money, for example, in SNY which is the New York RSN, that has the Mets exclusivity and the Philadelphia RSN in advance of Pennsylvania coming online and in advance of hopefully being accepted into the New York market. And that has some extra benefits for New Jersey as well.

So, to your point about the correlation between brand awareness and market share; I'm not going to draw a direct correlation there because if you've got a poor product, it doesn't matter how good your brand is. People will cumber through.

The first time, they might accept the app breaking down or a bet taking 30 seconds to be accepted or a bet taking 10 minutes to be resulted or whatever that will be. But they're not going to -- once they find out that there's products out there that are better and that's what will happen with the American consumer over time, they will try other accounts.

They'll have -- the average puncher will have more than one account and they will congregate to the best product. And yes, Caesars or whatever, that brand, I suppose, gives them a start but they're still going to have to know that piece.

And we've already seen it in the market shares in the U.S. I think in general terms, FanDuel have been able to hold market share more strongly in DraftKings because they have a stronger product, in our view.

And even an MGM, who has done well, I'm not sure they would have done so well without the experience and expertise of Entain. So there's a common theme here that FanDuel backed by the Flutter group and the skills and experience from there and MGM backed by Entain with the skills and experience.

We sort of see them as the stronger operators and we would put ourselves in that category in terms of ability to execute.

Okay. Thanks, Sam.

It's good disclosure [ph].

Thank you for the very good presentation. Just going on Larry's point there around, say, the FanDuel.

I use sort of 55%, I believe, data from external provider, DraftKings is 50%. Can you just talk to how much you're using at the moment of platforms such as Kambi or other competitors of your data and then, obviously, where that goes to in future state?

You obviously made those two acquisitions related to that, please; as obviously, we don't agree it will [ph].

Yes. I saw that in the Flutter presentation.

I haven't gotten friendly, sort of done that on our side. What I will say is in terms of the core betting platform, we're not using a Kambi, an SBTech or an OpenBet.

Even Flutter Group is very reliant on OpenBet which is owned by Scientific Games at the moment. It's up for sale, actually.

We -- our core betting platform is ours. In terms of data feeds, we do have data feeds relationships with -- there's providers out there.

There's multiple providers. Like anything, it comes down a commercial negotiation about value for money and what they're charging and what they give you, et cetera.

And for some sports, it makes a lot of sense to be able to rely on some of those data feeds. For example, there might be some sports out there that it's not worth because of the volume of turnover that we get on them.

Us, as a starting point, investing -- our quants and our model is to get that done in a proprietary fashion because we can get a feed in a service and even an in-play service from a third-party provider that can do the job. But when it comes to the popular sport, so the Big 4 American professional sports, the college sports which is massive and then things like EPL and tennis, if I draw a line there, they're very much a focus that we want to -- we're still having those inputs, some of these fee providers.

So, they can be inputs into our ecosystem and our model. And make no mistake that the Flutters of the world have lots of inputs and data flows.

But then, what they're saying is they take that information and they put it through their proprietary models to produce their pricing and their product and that's what we'll do. But I can't tell you what percentage it sits at the moment.

But I can say that we have the same sort of inputs that they have. And then we take those inputs along with others, our proprietary models, et cetera, to produce the prices and the offer that goes out to the clients.

That's very helpful. And then the second one is just related to your sort of view on TAM in the U.S.

by 2025 when it fully opens up at that stage. Where do you see that as a proposition?

And then your net margin take at 2.3% at the moment, some competitors are running in the teens and industry is 4.8%. Where does that rate settle by 2025 in your view as an industry?

Because, obviously, those two values are pretty related. So any insight on that would be very helpful, please.

Yes. So from a margin perspective, we talk in terms of trading or gross margin.

So a lot of the margins that are reported by regulators, et cetera, are gross margins, gross -- GGR. So from a trading margin perspective, we see things trending up over time.

Originally, a gross margin, trading margin, we spoke to a 5%. So we said, look, Nevada has been operating at 5% for very -- for a long time.

Let's go in there and just, at least as a starting point, aim for 5%. Now, we finished the year after some turbulence, some really big betting punches that dragged down our yields at 5.3%.

We definitely see trading yields having the ability to grow from there. If you think about a 5% book, the main markets where there's two outcomes, head-to-head lines, totals, they're a less than 5% margin product.

So if most of your turnover is happening on the simplest markets head-to-head lines, totals which is what people gravitate to first when they're just learning about betting, then your margins are going to be below 5%. The more that you can educate clients about taking prop bets and multi's and parlay's, then those products contain a higher margin if you can start taking your bookmaking or trading margin higher.

So we certainly see an opportunity to take it into the 6s and the 7s. You've got to be a little bit careful about where -- how high you take it because this is an entertainment product and you want your products -- your clients enjoying the experience.

So there's an upper limit as to where you want to take that. We're still determining where we want to go.

We do see price as something that we do want to occasionally lever. So we do want to be reasonably competitive from a pricing perspective and we are very good at risk management trading.

So we want to play into that strength. Then it really just comes down to how much do you give away in generosities.

So if you're making a gross margin of 6% and you're giving away 0.5% in generosities, free bets and the like, well, your net margin is going to be 3%. Now, our Australian business which has been live for a few years now, it gives away about 35% in generosities.

We'd like to see that come down a little bit but we're still growing pretty aggressively in the Australian market, too. So over time, you can expect the difference between U.S.

gross margins and net margins. The difference there will be about 35%.

And then as states get more mature, probably even a little bit lower, 30%, 25%. In terms of market TAM, we're comfortable going with -- we've got our own internal models.

Obviously, have a lot of states we expect to legalize and how big they'll be. But generally speaking, we would say that the market and the analysts in the market are pretty much on track with those expectations.

I think the thing that's interesting is just how they have changed even from -- obviously, we've lived and breathed this now since I entered into the U.S. market.

But how they've grown on the back of expectations, that there's probably more upside to the states. So while they might reach what would be expected in, say two or three years, they've actually got huge growth above and beyond from years 3 to 10.

And I think when we look at the Australian experience, we can clearly see that. Sort of 13 years to the opening up of the Australian market, still experiencing really strong growth, great opportunity and the U.S.

will be no different. So the excitement for us is not necessarily what the market is in FY '24, FY '25 but what can it be in FY '30 and FY '35 because it is what we've always spoken to.

The U.S. population is 13x the size of Australia.

We're doing $4 million online of net win. If you extrapolate that, that would be $52 million of net win for the U.S.

But we don't have in-play sports betting and we don't have online casino. So, we're pretty bullish on the long-term TAM and we're happy to sort of go with the market on the short-term TAMs.

Thank you so much. That was excellent.

So, that's it. Thanks everyone for your time and we look forward to talking more.

Thank you.