Thank you for standing by, and welcome to the PointsBet Holdings Limited FY22 financial results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Sam Swanell, Group CEO. Please go ahead.
Good morning. Thank you for joining this call for the PointsBet Holdings Limited full year 2022 results. This is Sam Swanell, Group CEO, and I'm joined today by Group CFO, Andrew Mellor, our US CEO, Johnny Aitken, and our Canadian CEO, Scott Vanderwel. 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 AUD unless otherwise stated. We will refer to the twelve months to 30th June 2022 as the reporting period, with the twelve months to 30th June 2021.
During the reporting period, we saw improvements in relation to many of our core financial metrics compared to the peak in Pennsylvania and iGaming operations in the states of New Jersey, West Virginia, Pennsylvania. We also have online sportsbook and iGaming operations in Ontario, Canada. We've continued to scale our operation through key hires across all departments with a focus on delivering on our product and technology-led strategy. In the U.S., we were thrilled to report the sports wagering and iGaming net win increased by 122% to $93.9 million. In Australia, the trading business achieved year-on-year net revenue growth of 30% and its third year of annual EBITDA positivity. This strong performance demonstrates PointsBet's capability to grow market share in an advanced market where we compete successfully against global groups such as Flutter, Entain, and Bet365.
In Canada, we completed our first full quarter of operations in Ontario. Total net win came in at CAD 200,000 with iGaming net win of CAD 700,000, offsetting sportsbook net win loss of CAD 500,000 with our casino offering live from day one. Following the completion of the successful capital raise in August 2021, raising CAD 400 million and a strategic placement of CAD 94.2 million to SIG Sports Investment Corp in June 2022, the company is adequately funded to execute our strategy in the near term with a cash balance at 30th June 2022 of CAD 472 million.
Further, as we look to capitalize on the substantive opportunity in North America, the Deferred Bonus Equity Option Instrument announced in June 2022 also provides the company with the flexibility to access additional capital as needed. Turning to slides six and seven. From a market access perspective, in September 2021, we announced an exclusive agreement with the Austin FC in Major League Soccer, gaining market access in the state of Texas subject to the passing of enabling legislation and licensure. Texas has a growing population of over 29 million people. In November 2021, we were pleased to be recommended by New York State Gaming Commission as one of only nine operators to operate mobile sports wagering in New York, launching our sports book operations in January 2022.
In that same month, PointsBet became the first sports book to offer live, in-play, Same Game Parlay options for NFL and NBA contests as part of its in-house proprietary technology integration, which we refer to as Odds Factory. Johnny Aitken will speak more to our in-play progress later. PointsBet also had a successful 2022 Super Bowl, becoming the first-ever sports betting operator to integrate into Super Bowl programming via our partnership with NBC, including pregame segments and NBC ticker integration with viewerships in the tens of millions. Underpinning our operational success was PointsBet's in-house technology, which again continued its impressive record of successfully managing peak days without incident. In April, we were thrilled to be honored by the iGaming Review as the top sports betting operator at the EGR North America Awards for the second consecutive year.
We're also pleased that in both April and August 2022, our US app was ranked in the top three in the iGaming category by App Annie testing, with the testing group commending PointsBet for in-app speed and a diverse feature set. This recognition is a testament to the continued investment we make in our technology and product. In June, we announced a strategic investment and partnership with SIG Sports Investment Corp, a member of the Susquehanna International Group. As part of this partnership, PointsBet's European technology subsidiary entered into an agreement with Nellie Analytics Limited, a member of the SIG group based in Dublin. Nellie has built cutting-edge quantitative models and technology to trade and make markets for sports betting using trading acumen, advanced statistical forecasting models, and quantitative research. These models and technology currently allow Nellie to trade successfully on sports betting exchanges around the world.
Nellie applies to sport the same quantitative approach that drives Susquehanna's success in the financial markets. Nellie can accelerate our focus on sharper in-play pricing, which will ultimately translate into a better in-play customer experience. With more confidence in our pricing, we can give customers differentiation and value on price, take bigger bets via increased wagering limits while maintaining an efficient and profitable business model. Excellence in technology, user experience, and trading is at the forefront of everything we do at PointsBet. Turning briefly to slide eight. As previously disclosed in our quarterly activity reports, the global trading businesses delivered net win of AUD 309.4 million, representing growth of 48% for the reporting period as compared to the PCP. I will now hand over to Andrew Mellor to walk through our financial results.
Thank you, Sam. Now turning to slide 10. I will speak to our normalized results. However, please note there is a summary of our statutory results on slide 34, and a reconciliation of the normalized results to the statutory results included in the review of operations and on slide 35 of this presentation. The group's net win for the reporting period was AUD 309.4 million. Net revenue is then calculated post-adjustments being made for GST paid in Australia, B2B revenue from PointsBet Europe and PointsBet U.S., revenue earned by our U.S. racing ADW business, and other fair value adjustments. For the reporting period, PointsBet reported net revenue of AUD 296.5 million, a growth of 52% versus the PCP. There is a reconciliation of net wins and net revenue on slide 36 of this presentation.
Group gross profit of AUD 121.6 million represented growth of 39% over the PCP. Group gross profit margin for the reporting period was 41%, slightly lower than the gross profit margin of 45% we achieved for the PCP. This was mainly due to a lower gross profit margin in the Australian trading business versus the PCP, due to increases in some taxes and product fees, including an increase in the Point of Consumption Tax in the state of Victoria from the 1st of July 2021, as well as changes in product mix, with the reporting period having a higher contribution of revenue from betting events which attract higher product fees.
Note that the H2 FY22 group gross profit margin was an improvement on H1, and pleasingly, the U.S. business gross profit margin during the reporting period increased as compared to the PCP. Recently, in Australia, both the Queensland and New South Wales governments announced increases to the Point of Consumption Tax. We estimate that this will cost the Australian trading business circa AUD 10 million in FY23, prior to any remedial strategies we implement. The business is well-placed to navigate these regulatory challenges, particularly with the recent appointment of Andrew Catterall as Australian CEO, and a laser-focused management team determined to deliver ongoing operational efficiencies. We currently anticipate again being EBITDA positive for the coming full year in Australia.
As previously disclosed in our quarterly activities report, group sales and marketing expense was AUD 236.8 million for the reporting period, with Australia accounting for AUD 61.5 million, the U.S. accounting for $162.6 million, being $118 million, and Canada accounting for CAD 12.8 million, being CAD 11.7 million. Noting CAD 4.7 million was spent in pre-launch marketing in Q3 FY 2022. This increased marketing investment assisted in the delivery of over 513,000 group cash-active clients as at the 13th of January 2022. The reporting period saw aggressive marketing spend from our U.S. competitors. However, we maintained our disciplines and ROI-focused approach to marketing and promotional spend.
Competitor marketing and promotion aggression in the U.S. will lead to greater share of voice for PointsBet's continued disciplined marketing investment and provide greater client exposure to our ever-improving market-leading product and service offering. In NBC, we have a supportive media partner and major shareholder, and we continue to work together to maximize U.S. marketing spend efficiencies. Looking towards FY 2023, we anticipate the U.S. marketing expense will be no greater than the FY 2022 US marketing expense, as we continue to regionalize our marketing expense and reduce spend in some of the less targeted acquisition channels. In Australia, we were thrilled to announce that following the successful Shaquille O'Neal marketing campaign in FY 2022, we have signed Shaq for a further two years. We were very excited to have hosted Shaq in Sydney for the launch of the new campaign last weekend.
In Australia, we anticipate FY 2023 marketing expense to be slightly higher than FY 2022, and in Canada, we anticipate the FY 2023 marketing expense would run annually at a quarterly rate similar to the Q4 marketing expense of CAD 7 million. Employee benefits expense increased over the reporting period. Global FTEs as of the 30th of June 2022 grew to 627, up 50% from 30th June 2021. In addition, we also use the services of third-party service providers. As we are beginning to reach scale, we expect FTEs to grow only moderately in FY 2023, with the majority of the additional staff adding to product and technology. However, we will see an increase in the employee benefits expense in FY 2023 compared to FY 2022, given the total expense in FY 2023 will reflect the annualized employment of those hired throughout FY 2022.
Product and technology expenses increased versus the PCP as the company launched operations in West Virginia and Virginia in H1, and in Ontario, New York, and Pennsylvania during H2. As a result, by the end of the reporting period, the company was operational in Australia, 10 U.S. states, and Ontario. This led to increased betting volumes and activities and increased costs associated with hosting, operating, and securing our technology and data platforms. This reflects a level of variability in this expense item. As the states launched in the reporting period got only operational for part of FY 2022, and we anticipate launching an additional 4 U.S. Jurisdictions in FY 2023, we would expect that the product and technology costs in FY 2023 would increase compared to the reporting period.
Finally, as it relates to administration and other expenses, we would expect to see only a moderate increase in FY 2023 compared to FY 2022, noting these expenses had increased 45% in FY 2022 compared to FY 2021. The normalized EBITDA loss was AUD 243.6 million for the reporting period. As always, we will continue to take a disciplined and focused approach to cost management and always remain nimble and able to make relevant adjustments to expenditure where we determine it to be appropriate. Turning to slide 11, speaks 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 AUD 195.2 million, an increase of 30% versus the PCP and a positive EBITDA of AUD 7.7 million in the reporting period compared to the EBITDA of AUD 9.2 million in the PCP. The Australian trading EBITDA was lower year-on-year due to lower gross profit margins, as previously spoken to, and an increase of marketing expense of circa AUD 10 million versus the PCP. As communicated at the quarterly update in January, the company's FY 2022 marketing strategy was to front end the marketing expense significantly into H1 to take advantage of the Shaquille O'Neal campaign through the football finals and Spring Racing Carnival. The H1 FY 2022 marketing expense of AUD 44.7 million was reduced to AUD 16.8 million for H2 FY 2022.
Turning to the U.S. On a statutory basis, the U.S. trading segment recorded net revenue of $ 98.7 million and an EBITDA loss of $197.4 million in the reporting period. This loss was primarily driven by the U.S. marketing expense of $118 million as we expanded operations across 10 U.S. states and as we continue to grow our U.S.-based execution team during FY 2022. The technology segment derives its revenue from licensing fees charged to the Australian, U.S., and Canadian trading businesses, as well as from European B2B operations. The technology segment recorded inter-segment revenue of AUD 26 million in the reporting period, as can be seen in note five to the financial accounts. Please note this revenue is eliminated in the company's consolidated financial statements.
In addition, during the reporting period, the technology segment recorded B2B revenues of AUD 2.4 million derived from PointsBet Europe. On a statutory basis, EBITDA for the technology segment for the reporting period was a loss of AUD 19 million compared to the PCP loss of AUD 9.6 million. Corporate administrative costs are costs that cannot be readily allocated to individual operating segments. Statutory EBITDA for the corporate segment for the reporting period was a loss of AUD 25.6 million compared to a PCP loss of AUD 12.4 million, due mainly to an increase in employment benefits as a result of increased headcount of support staff, increase in listed company-related costs, including share registry and stock exchange costs resulting from capital raising transactions that occurred in FY 2022, and an increase in external consultant and legal costs from capital raisings and corporate transactions.
Startup costs before Canada became operational are also included in the corporate segment up to the end of H1 FY 2022. The total group statutory EBITDA loss was AUD 250 million for the reporting period. After accounting for net finance costs of AUD 3 million, net foreign exchange gains of AUD 14.1 million, depreciation and amortization expense of AUD 31.4 million, and an income tax benefit of AUD 2.6 million, the statutory loss for the reporting period was AUD 267.7 million. Turning to slide 12. The balance sheet was strengthened over the reporting period, with the group having net assets of AUD 736.4 million as at the 30th of June 2022.
Net asset movements as compared to 30th June 2021 are driven primarily by cash received upon completion of the AUD 400 million capital raise in August 2021 and AUD 94 million capital raise from SIG Sports in June 2022. Secondly, intangible assets increased from AUD 142.5 million to AUD 212.5 million as a result of the investment in U.S. licenses and market access fees, including a U.S. $25 million payment to the New York State Gaming Commission for market access to the State of New York, and a U.S. $11 million payment to the Pennsylvania Gaming Control Board for market access to the State of Pennsylvania. Thirdly, continued investment in our betting platform through the capitalization of product and technology employee costs and other related development costs.
Finally, an increase in trade and other payables as the operational size of the business continues to grow in both Australia and North America. The prepayments balance as of 13th of June 2022 includes both cash prepayments and equity prepayments related to our NBC agreements. These prepayments represent future offsets to the total marketing commitment under that partnership. Please reference note twelve to the financial statements for more detail on NBC prepayment movements over the reporting period, noting these are reported in Australian dollars. To convert to US dollars, please utilize the relevant end of reporting period FX rate. Liabilities includes a financial non-current liability relating to the fair value of the debt component of the share options issued as part of the NBC transaction.
The AUD 79.7 million includes the notional interest charged in fair value change on the financial liability for the year. Other liabilities include an amount received as part of the New York license fee reimbursement from Resorts WorldBET, a subsidiary of Genting Group, as part of our B2B platform provider agreement to power the Resorts WorldBET online sportsbook operation in the state of New York. This amount will be recorded as revenue on a straight line basis over the life of the agreement. As previously noted, this strategic B2B agreement should be viewed as an accretive and valuable partnership for the company, but not indicative of a larger B2B strategy of PointsBet. Turning to FY 2023 and the company's capitalized betting platform development costs.
We currently expect these capitalized costs to increase compared to FY 2022 as a result of the annualization impact on FY 2023 of technology and product employees hired during FY 2022, as well as some additional hires in FY 2023. While we do anticipate some market access payments in FY 2023 in relation to the next four states we plan to launch, we expect these to be relatively small amounts compared to those payments made for market access and launch licensure in the reporting period. Turning to slide 13. I will briefly touch on the cash flows as these have been previously disclosed and detailed as part of our Appendix 4C reporting obligations in October 2021, January 2022. In summary, net cash flow used in operating activities, excluding the movements in player cash accounts in the reporting period was AUD 212.8 million.
Net cash outflows from investing activities was AUD 93.2 million, and net cash inflow from financing activities was AUD 515.3 million. The company held AUD 472.7 million in corporate cash as at 3rd June 2022 and has no corporate debt. I will now provide an overview of the Australian trading business. Turning to slides 15 and 16. The Australian trading business continued its strong performance, ending the reporting period with turnover of AUD 2.5 billion, up 28% compared to the PCP, and net wins of AUD 215.4 million, up 30% from the PCP. Gross win margin and net win margin were 13.3% and 8.5%, respectively, for the reporting period.
Given the growing scale of the Australian trading business, during H2, we established dedicated technology and product structure to focus on Australian-led initiatives as we continue to improve our Australian product offering. As previously communicated at the Q3 and Q4 results, H2 marketing expense was significantly lower than H1 as the focus turned to profitability for the remainder of the financial year. As a result of this strategy, the Australian trading business's full-year marketing expense was AUD 61.5 million, which assisted in delivering 12 months rolling cash actives to the 30th of June of 239,000, an increase of 22% compared to the PCP. I'd like to now hand over to Johnny Aitken, our U.S. CEO, to run through highlights for the United States.
Thank you, Andy. Now turning to slide 18. For the reporting period, the U.S. business achieved a sports betting gross win of $158.7 million at a gross win margin of 6.5%, with a sports betting net win of $74.1 million at a net win margin of 3.0%. In addition, the U.S. business achieved iGaming net win of $19.7 million. This delivered an overall US net win of $93.9 million for the reporting period, more than double that reported in FY 2021. As a reminder, our focus in the U.S. is to ensure every client we acquire is capable of being net or revenue generating. Rather than focusing on the sheer number of actives, our teams are focused on targeting, procuring, and retaining genuine customers that generate acceptable lifetime value.
The improvement in net margin from the PCP is evidence of this approach. We noted in previous calls that there was an opportunity to better utilize our tactical promotions. A number of optimizations were made during the reporting period, refining our approach with a focus on rewarding our high-value, engaged superuser client cohort and gaining an improved share of wallet from them. Now turning to slide 19. For the reporting period, our marketing expenses were $118 million. As previously reported, overall U.S. working media cost per FCA was under $500K for the reporting period. First cash actives for the 12 months to 30th June 2022 grew to 266,000, up 67% compared to the PCP. It should be noted that this metric also reflects our retention efforts, not just acquisition volumes.
PointsBet's blended U.S. online handle market share in the states we are operational consolidated to 3.7% for Q4 FY 2022, compared to 3.6% in Q3 FY 2022. This updated blended share of 3.7% included the June handle numbers for Illinois, Colorado, and Virginia that weren't yet released when we reported the blended market share number of 3.5% at the Q4 result last month. While we are pleased with the continued growth in actives and handle, our number one priority is focused on delivering a world-class betting experience, which will manifest in continued net win growth. As of today, in the U.S., we have live online sportsbook operations in 10 U.S. states and are gaming in 4 U.S. states.
As announced earlier this week, we anticipate going live in Kansas this Thursday, the 1st of September, and four priority state rollouts, being Louisiana, Ohio, Maryland, and Kansas. With the last three, we expect to be hard launching on the starting line. This would mean we currently anticipate finishing financial year 2023 being live in 14 U.S. states. PointsBet's total addressable market continues to grow. The trading results of the individual states for the full year can be seen on slide 37. As we head into FY 2023, it is an appropriate time to amend our reporting procedures and shift away from reporting U.S. state-by-state trading metrics. Our strategy into FY 2023 will continue to evolve.
In some states, we will take a localized operational approach, whereas in other states we will take a regionalized multi-state operational approach, which as a result, will not always align to a specific state trading performance metric. Operationally, this is the way we view the U.S. business, and it is also the way in which our U.S. peers report. As a result, this will be the last reporting period in which we will provide a state-by-state breakdown of the key trading metrics, noting many U.S. state gaming regulators provide detailed monthly performance data for their respective U.S. state. In avoidance of doubt, we will continue to report state-by-state market shares. Turning to slide 20. The NBC and PointsBet partnership will shortly complete its second full year, delivering opportunities that broke new ground in so many ways.
NBC's wide portfolio of sports media rights allowed PointsBet to advertise locally in and around the top leagues and moments in American sports, including, but not limited to the NFL, the NBA, and the 2022 Olympic Games in Beijing. We also provided both seasoned bettors and newcomers with contextual odds integrations throughout the NFL, NBA, MLB, and NHL seasons that highlighted our wide variety of betting markets with a keen focus on NBC RSN viewers. A highlight from recent months were the bet cast that appeared across NBC Sports, our regional networks in Chicago, Philadelphia, and Washington. Together with NBC, we developed four iterations that highlighted various markets, both pre-game and live, sign-up offers, and on-site promos with live updates throughout the entire game. Our NBC plan was rounded out with investment across NBC's digital properties, including their fast-growing streaming platform, Peacock.
This combination of regional assets continues to provide PointsBet with the ability to create bespoke marketing strategies to reach our target audience. We will remain, I should say, a core focus of PointsBet's in the next yearly iteration of the NBC plan. PointsBet has also continued to partner with Effectv, Comcast's audience-focused solution for linear TV. Data-led media plans reach potential PointsBet customers in eight states, with a focus on custom-built creative for the Comcast audience that kickstarts a sign-up journey via user's voice activated remote. Turning to slide 23. Our mission to create the best in-play betting experience for our customers continues to progress in a positive direction, with in-play expected to represent 75% of all bets in the U.S. within the next three years. Odds Factory is our proprietary trading platform which houses our pricing algorithms.
Owning the platform and the experience of eSports allows us to curate an experience around what our customer wants. Odds Factory is a modern cloud-based technology which allows us the ability to move faster than our competitors who are either restricted by third-party providers or by legacy technology that prevents the flexibility required to move fast. When we deliver our Odds Factory, our pricing algorithms to a particular sport, we unlock capabilities to deliver a full feature set to the customer, which includes a market-leading set of betting and Player Props, including great breadth of offering and more accurate pricing. Same Game Parlay, both pre-match and in-play. Lightning Bets, being the ability to bet on which team will score the next point and other similar micro betting contingencies. Cash out availability across all markets.
Our strategy set is to set the foundations in place by launching Odds Factory for the six core U.S. sports. To date, we have launched NFL, NBA, college basketball and MLB, with NHL due in Q2 and college football due in Q3 FY 2023. Once Odds Factory is launched for a sport, we will then continuously iterate on this experience to drive more player engagement and to delight our target customer. We are looking forward to the launch of the 2022-2023 NFL season next Thursday, the 8th of September. We finished last NFL season with a very strong in-play product and continue to be the only operator to offer in-play Same Game Parlays on all of our Odds Factory sports.
Going into this NFL season, we will be building upon a strong foundation and will further enhance the overall user experience and specifically focus on our Lightning Bets experience. This will provide our customers a market-leading in-play experience, delighting them with our engaging and fast and easy product to use. Our NFL product is ready to go. I will now hand it across to Scott Vanderwel, our Canadian CEO.
Thank you, Johnny. Turning to slide 26. We were pleased with the progress made in establishing and setting up a local operating jurisdiction in Canada in fiscal year 2022. We are proud to be one of the first operators regulated by the Alcohol and Gaming Commission of Ontario, as it showed the confidence the regulators have in our ability to deliver an innovative, safe, and responsible experience to Canadian consumers. The Canadian team has a mandate to compete in a very local manner, reflecting the competitive dynamics of Ontario and the permissive regulatory framework for gray market repatriation. During the reporting period, our team has been scaling and focused on building partnerships with athletes, teams, and organizations that matter to Canadians, as we are focused on delivering an authentically Canadian gaming experience for Ontario sports fans.
For full year 2022, we were operational for the final quarter with the Ontario market opening on April fourth. As mentioned in our Q4 earnings call, we were pleased with the overall performance. Total sportsbook handle was at CAD 16 million in the period, and total net win came in at CAD 200,000, with iGaming net win of CAD 700,000 offsetting sportsbook net win loss of CAD 500,000 and cash actives of 7,200. PointsBet is a new brand to Ontario, so we continue to focus on building awareness of who we are.
Given the level of competitive intensity with 19 licensed sportsbook operators and other gray market providers still in operation as of the end of June, our approach has been to stand out from the sea of sameness customers are seeing through mass media and to engage with our target customers more directly through strategic partnerships with locally relevant sports teams and organizations. As we look ahead to full year 2023, we are excited about the potential of our plan to deliver growth as we approach the busiest time in the North American sporting calendar for the first time. We'll be entering the first full season of our MLSE deal and expect to be able to drive significant top-of-funnel activity through those activations.
We continue to invest in both our sportsbook and casino products and overall app experience, and we'll be bringing new and exciting markets to our customers throughout the year. Lastly, it should be noted that the Ontario market structure is well set up commercially for operators. Not being tethered to a casino, racetrack, or retail footprint to operate, that is no partner revenue share agreements, a nominal licensing fee, and an effective tax rate of 18% of PGR make the overall future economics favorable as our platform attains further scale. I will now hand back to Sam.
Thank you, Scotty. Before I conclude, I would like to comment on the group's continued commitment to responsible gambling. Responsible gambling initiatives will continue to remain central to our organization's ESG commitment, and we look forward to releasing our inaugural ESG report in the coming weeks. PointsBet continues to meet regulatory and community expectations in delivering a premium experience which integrates responsible gambling. FY 2023 will continue to emphasize interdepartmental collaboration to reinforce our safer play commitment. To highlight a couple of the key statistics we had during the reporting period, 126,000 global unique views of our responsible gambling page, and 1,700 average global impressions per RSG social media postings. Country-specific strategies are in place to meet the unique needs of our global customers and engage with relevant responsible gambling bodies.
In Australia, PointsBet contributed to the development of a national safer gambling media campaign with Responsible Wagering Australia, the independent peak body for Australian licensed wagering service providers. In the U.S., PointsBet partnered with the National Council on Problem Gambling on a research initiative which gathers feedback from regulators, industry stakeholders, and safer gambling advocates to inform responsible gambling decision-making. In Canada, PointsBet developed a socially responsible campaign with brand ambassadors, the Trailer Park Boys, to promote gambling as a form of entertainment in our authentic Canadian way. Turning to slide 10. It is clear that North America will deliver the vast majority of regulated global gaming growth over the next decade. We established ourselves as a global gaming operator, which has built material incumbency in both North America and Australia.
We've now enhanced our product, scaled our team, and possess the in-house technology and market access to successfully compete in North America. We have developed best-in-class partnerships which will help accelerate our trajectory to take advantage of this enormous opportunity. As we have previously said, technology and product represent our right to win, with the execution demands of the growing in-play opportunity, ultimately determining those who will simply partake and those who will thrive. Further, to compete at scale, operators will require operations in hard-to-access states such as New York, Illinois, and Pennsylvania, with PointsBet currently live in each of these key jurisdictions. Finally, we have built a best-in-class global team that understands what is required to deliver success in FY 2023 and the years to come as the North American TAM continues to rapidly expand. That team was further enhanced today as we announced the appointment of Mr.
Edward Hartman to the position of Group Chief Strategy Officer. I'm now happy to take questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Larry Gandler from Credit Suisse. Please go ahead.
Hi, PointsBet team. Thanks for taking the question. I guess, with the release of the account, some of the new information was around the STIs and LTIs. If I can ask around that. Sam, in the STIs, you had a objective of CPAs to LTV ratio, which wasn't achieved. I'm just wondering, I know you've talked about having better information going into FY 20 23. How have you changed that objective? Whether it's still an objective? Is the objective changed? How are you going to achieve that in FY 2O23?
There you go, Larry. Yeah, well, certainly, first of all, I suppose that, you know, we set ourselves some pretty demanding targets when we set our targets. We definitely made progress in regards to that KPI, that ratio, but we just didn't meet the standard that we'd set ourselves. I think yes, you can take it as read that that is a ratio that we wanna continue improvement in. You know, we've spent. We've learned a lot over the last couple of years from our marketing. You know, we've trialed a lot of channels. You know, I think we've spoken pretty consistently about that ratio being sort of a critical step on that path to profitability.
We've seen improvement as we've improved our marketing execution and focused, you know, I suppose more on those higher value clients. We're certainly seeing that CPA to client value ratio improving. Yes, we wanna see it keep improving as we continue to refine our marketing execution in FY 2023.
As you looked into the fourth quarter in recent time, do you feel you guys are on track or close to achieving the new objectives that the momentum is there for that?
Yeah, we do. I mean, we made a statement obviously just now, Larry, that we expect U.S. marketing to be no more than what it was in FY 2. When you consider the fact that we will be expanding our TAM, that talks to a more targeted, focused approach of marketing, and that, you know, we believe that will deliver that improving ratio.
Okay, great. Last question from me is, those other metrics, market share, revenue, and obviously the in-play betting that was achieved, but the ones regarding market share revenue, are those also metrics for FY 2023?
I think we'll report on that this time next year, Larry. You know, I don't wanna sort of disclose what our key criteria might be, but yeah, I think the summary is we're really proud of the year that we delivered. You know, we've obviously, as we said, we've scaled our team, we've grown revenue dramatically. We've increased our TAM. You know, we've formed strategic partnerships with the likes of SIG, but we do set ourselves high standards when it comes to those STIs.
Okay, great. Thanks, Sam.
Thank you. The next question comes from Rohan Sundram from MST Financial. Please go ahead.
Hi, team. Just one general question, maybe for Sam. Are you seeing any impacts to your customer base from the perceived consumer pressures, the macro environment, or is it the case that the customer base is holding up really well? Has anything surprised you on this front at all?
We're not seeing any clear evidence. You know, we've taken on some of the commentary that's come from some of our competitors in North America where, you know, they've reported similarly that seems to be holding up pretty well. You know, we take note of things like visitation to Las Vegas and visitation to regional casinos and, you know, a general thought process that if people are prepared to travel for entertainment, they're certainly prepared to, you know, pick up their phone and have a bet on the app for that entertainment. No, I wouldn't say anything, but it is something that we're carefully continuing to monitor.
Thanks, Sam.
Thank you. The next question is from Don Carducci from JP Morgan. Please go ahead.
Hi. Morning, team. First question's on Canada, and this is from Ontario, having just reported the first cut of OSB and iGaming results overnight. Given that there wasn't any market share breakdown or data split across OSBs or iGaming, it does seem like it's a bit hard to make a good comparison. I think the expectations were much higher than what came through for the total market size. Can you kinda comment on what you saw across either your actives or engagement between OSB and iGaming, and why that number was markedly lower than anticipated?
Yeah. I think, you know, obviously they've just reported on the regulated environment, Don, and, as we know, there's a large gray market, you know, as opposed to the U.S. where there's still a substantial black market operating. But we know the gray market in Canada is far larger and, you know, those operators, in the most part, intend to become licensed. I think that combined with the fact that, you know, the market launched, you know, heading into sort of the down part of seasonality, I think we've gotta give Ontario the opportunity for those gray market operators to get licensed to go through a football season and see how quickly it can pick up. You know, our expectations sort of similar to most market commentary in terms of the potential size of that market.
You know, we would expect to see it picking up aggressively over the next 6-12 months.
Given the population, and then when you compare it to the New Jersey, Pennsylvania, Michigan, et cetera, you know, even still, I guess that Q2 sports betting and iGaming revenues were quite low. That doesn't change your perspective on that Ontario TAM? You still think it's quite large or no change to your expectations of the size?
No. That doesn't, these results don't change our expectations. You know, again, we'll be watching closely like everyone will over the next 6-12 months. You know, most of the Canadian population lives close to the U.S. border. You'd expect that their sports betting seasonality would track pretty close to that of the U.S. Let's give them an opportunity to ramp up through the NFL season. I know from a PointsBet perspective, a lot of our partnerships and marketing initiatives are, you know, structured around the upcoming seasons. Yeah, we're not ready to write off Ontario just yet.
Great. Thanks. A question for, based on a comment that Andy made, and that's around the AUD 10 million impact that you expect on the Aussie business from the point of consumption tax changes. Can you talk about or maybe break down how much of this is due to the change for tax and generosity versus maybe going to a 20% point of consumption tax? Can you walk us through how you're thinking about the level of generosity as a percentage of turnover going forward?
Yeah, I'll take that. I mean, look, I think, no, I can't break down the AUD 10 million. That's an overall impact of Point of Consumption. As you know, in Queensland, some of that was related to the rise in the rate and the treatment of generosities. That's just an overall impact. For our Aussie business, you know, we do expect to be able to reduce the level of generosities over time. You know, the way to do that is to improve our product, because then we can rely on our product more strongly as our retention tool, rather than having to be generous, you know, more generous, to retain clients.
You know, that's the broad strategy for Australia over the next 12 months, is to rely on the product more, find efficiencies in overall generosity. Also to, you know, probably like a lot of our competitors have done over the last year or two, be more targeted with those generosities, you know, to make sure that you're really allocating them to the clients that you want them to go to that generate the value. You know, that's why we believe that we can find improvements to overcome that AUD 10 million impact. It's, you know, certainly significant nonetheless.
I know the last time we spoke, you said that you weren't necessarily going to deprioritize Queensland. Have you found that there's maybe a natural, you know, I don't know, shift in consumer behavior away from betting on Queensland? Or what has been the change or the trend that you've seen as a result?
Well, we didn't follow the leads of some of the competitors in the market that, you know, took an approach to remove Queensland racing product from, let's call it, their next to go screens. I mean, obviously that was done to, I suppose, send a message about the impact that they can have when they do deprioritize products. We didn't take those actions. Look, I would say that, again, that category of getting more efficient with how we use our promotional budgets and how we think about margins will take into account state by state differences in the cost of doing business. A bit like, you know, we do in the U.S. already, you know? It will take that into account. It's not like it will be business as usual and just carry on through those changes.
Awesome. Thanks, Tim.
Thank you. The next question is from Phil Chippindale from Ord Minnett. Please go ahead.
Oh, hi, guys. Thanks for your time. First question, I just couldn't see it in the materials, but the balance of the three states that you're looking to launch in Louisiana, Ohio, and Maryland. Can you talk to the timeframe around the targeted sort of launches for those?
Yeah, I can, but I'll get Johnny to talk to it. Johnny, you wanna take that one?
Yeah, sure. Sort of in relation to Louisiana, we're on toward the goal line of launch, and they're just waiting a final clearance from the gaming sort of regulator down there in Louisiana to launch. Our expectation and hope is, you know, we launch within month one of the NFL season, you know, within the month of September. Ohio, the state, has come out and stated a clear launch time of sort of January 1st, 2023 for all licensed operators. We were one of the first to have our sort of license application in. Again, our expectation is to be on the starting line in Ohio from January 1st, 2023. Then sort of Maryland, you know, is still a little bit unknown at this stage.
You know, we expect between Christmas to sort of New Year's time potentially to be the date that sort of Maryland turns on the green light for licensed operators to go live there for online sports betting operations. We expect to be on the starting line there as well.
Thanks for the extra color. Just a final question from me. Just on that U.S. marketing expense being no greater than FY 2022. That's a little lower than I expected, especially given major states like New York and Pennsylvania only commenced operations in the second half of the financial year just gone. I'm just wondering about, you know, what this means for market share. Have you guys changed your market share or desired market share level for the U.S. business?
No, we haven't, Phil. I mean, I think again, we've had a lot of learnings over the last couple of years from the marketing activities that we've executed. You know, we believe there's plenty of sort of optimization that we can find from those learnings. Remember when we were launching in New York, Pennsylvania, and Virginia as an example, we were spending pre-live, you know. In some ways, there has been like a full year impact for those states in the numbers. Really we're sort of talking about launching these newer states and finding the marketing budgets for sort of within new systems where that we're talking about.
Okay, thanks. That's all from me.
Thank you. The next question is from Chris Savage from Bell Potter. Please go ahead.
Thank you, and good morning. Sam, maybe one for you. Canada, you disclosed a CAD 15 million EBITDA loss for Q4. Should we annualize that as a guide towards what the EBITDA will be in FY 2023 or do you think it'd be better or worse than that?
Yeah. Hi, Chris. It's Andy. I mean, we don't provide obviously guidance on EBITDA. The comment that I made on the call was specifically in relation to marketing spend, to give you a feel of where we feel marketing spend will go, and that was the Q4 marketing spend for Canada was CAD 7 million, and that should run rate across the full year. But I can't really comment to EBITDA for the full year.
Andy, while I've got you, the market access was AUD 53 all up in 2022. You suggest that or said it would be smaller in 2023 with the 4 states you're looking to launch in. Can you give us an idea what the total across those 4 states will be?
Yeah. I mean, let's talk to FY 2022. I mean, we had two very large payments in FY 2022. There was $25 million in New York and 11 million U.S. in Pennsylvania. We don't anticipate payments of anything like that scale for the four states. Yeah, that's why the reference was made on the call that we expect the market access payments in FY 2023 to be significantly lower than FY 2022.
I don't know, Sam or Johnny. Johnny said this quite quickly. Is the target now 14 live states at the end of FY 2023? Because that seems a bit of a change from before when it was CY 2022.
Yeah. Well, Al, we were ready to go for CY 2022. I think what Johnny's intimated there, that Ohio, the regulator's not gonna be ready to go until the end of January. They've sort of come out and said that. That's a little bit behind where most would have expected a few months ago. Maryland's a little bit of a watching brief.
Sure.
We're on the Kansas starting line on the first. We'll be on the Maryland starting line on, you know, whenever it's ready to go, and Ohio. Yeah, that might be out of our hands. The one that is obviously a live market, a catch-up state for us is Louisiana, and I think within a month of NFL season. Yeah, within the next month or so, we'd be expecting to be launching in Louisiana subject to, you know, the regulatory final OKs.
Does that suggest, Sam, I'm not being critical. You get Kansas, Louisiana, Ohio, and Maryland up sort of by January next year. Does that then suggest you won't or don't anticipate launching any more states for the remainder of the second half of FY 2023?
Yeah. I mean, I think that's the current intent. One state that's a little bit of a watching brief is Massachusetts. Position, Phil, at this stage is that, you know, we really don't wanna let new states go by, because we do see that as an opportunity to be on the starting line and not give up that disadvantage. We are conscious of sort of a quality over quantity approach, and we wanna make sure that we're, you know, we're maximizing our execution. Massachusetts is maybe a main sort of swing factor there.
Last question, is the next big state likely to be Texas? I mean, you've always said Florida's unlikely. California's a way off. Texas, you've got your partners set up, so is that likely to be the next big one?
Well, I mean, Phil, there's actually a really big ballot initiative playing out in California in November. There's been a lot of money being spent by various online operators and tribal parties in the fight with some opposing initiatives on the ballot. There is a chance that we see some action out of California at the end of the year and, you know, perhaps a market going live late next year. I think our view is perhaps that it's maybe less likely than likely. California's, you know, certainly in the discussion. From a Texas perspective, we'd expect to see some discussion around that. They have a biannual sort of process, so that discussion should happen late next year, middle of next year, I think is right. You could, you know, you
That we're not gonna sort of get any more insight for probably another 12 months on Texas.
Sure. Great. Thank you.
Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.