Pointsbet’s share price value continues to go down in the new year too. The sports betting operator’s shares sky-rocketed early last year and went over $17 per share. However, as the US wagering market got more competitive and the excitement died down a little, Pointsbet’s share price value started to go down, decreasing by 40% on January 5.
Pointsbet’s shares dropped by more than 4% in the past month, and by over 5% in the last week alone. On January 5, the company’s shares were at $6.80, down 5.16% compared to the day before. The drop in value surprised some people because there wasn’t any Pointsbet news that would influence the price.
Uneven Trading Influencing the Price
So why are Pointsbet’s shares dropping in 2022? Well, it seems that Pointsbet is losing value not because of things happening in the company but because general trading in the industry is off to a poor start this year.
Only a few companies are seeing their share prices increase, and that is in line with the fact that the S&P/ASX Consumer Discretionary Index dropped one per cent on January 5 and the S&P/ASX All Technology Index has decreased by more than two per cent.
Pointsbet was not the only Australian betting operator to be feeling the effects of choppy trading activity. Tabcorp Holding Ltd‘s share price value was also down one per cent.
An Equity Deal with Penn Interactive
Pointsbet recently announced that it will issue 509,128 ordinary shares to Penn Interactive Ventures, LLC. Penn Interactive is a subsidiary to Penn National Gaming and got the shares at a price of $6.884 per share. That means that Pointsbet made a good deal with its US investor, as that price was 1.23 per cent higher than the price at which Pointsbet is trading now.
According to reports, Penn asked for additional equity instead of cash consideration. Pointsbet issued the shares under Part 6D.2 of the 2001 Corporations Act, meaning it didn’t have to disclose any information to investors.
Getting Ready to Start Operating in Ohio
Pointsbet and Penn agreed on the deal after it became official that sports betting is legal in the state of Ohio. Governor Mike DeWine legalized sports betting on 23 December 2021, and Ohio residents are going to be able to place their first legal sports bets starting from January 1, 2023.
The state will now start drawing up the sports betting rules and regulations. Bookies will not operate in Ohio until the turn of the year.
With sports betting getting the green light in Ohio, other gaming services will likely follow too. That’s probably the reason why Pointsbet and its US betting partner decided to consolidate their position before they start offering their services to Ohio residents.
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