Australian sports betting operator PointsBet has truly hit the ground running after joining the US market just 15 months ago. The company arrived on the New Jersey scene with no pre-existing brand awareness and the sole aim of establishing itself among the region’s top players. Now, the operator holds significant market share in the Garden State, and has since established market access deals in an additional 11 states. With some big plans and a talented management team in place, the future certainly seems bright for this operator.
The man behind this development, US CEO Johnny Aitken, could certainly be considered a product of his childhood environment. The Australian exec grew up hearing the cheers of the Melbourne Cricket Ground through his bedroom window as his childhood home was located just 200 meters from the world-famous arena. This, along with his father’s love for horse racing, led Aitken to develop a passion for the industry from an early age.
It’s clear that his Australian heritage was a significant part of Aitken’s motivation for joining the gambling industry. A successful bookmaking industry seems like a natural fit for a nation overflowing with sports lovers. In 2017-18, Australia saw turnover of AU$4.7bn (US$3.38bn) on horse racing and sports betting together. This figure is perhaps unsurprising when 39% of the 25 million-strong population are estimated to be regular gamblers. “Per capita it’s the most mature, most lucrative market in the world,” Aitken explains. “It’s just inherent in the culture; racing on a Saturday and then betting on the NRL or AFL during the week.”
After high-school, Aitken completed a bachelor of commerce at Deakin University, majoring in sports management and marketing. Here, he was able to benefit from his first venture into the world of professional betting. As he completed his studies, the exec learned how to price up bets and utilize algorithms while working for professional betting syndicates. It wasn’t until Aitken met Tom Waterhouse however, that he truly fell in love with the fast-paced world of bookmaking.
Part of the famous Waterhouse family, Tom comes from a lineage of bookmaking, racing and training excellence. Throughout the mid-2000s, he was among the most famous horse racing bookmakers in the world, running his own sports betting service while placing high-end bets of his own to manage risk. It was during this time in 2010 that Waterhouse hired Aitken, along with current PointsBet director and CEO Sam Swanell, to oversee the development of his new online business TomWaterhouse.com.
As Aitken discusses this time in his life, it’s clear that Waterhouse became a significant role model for him throughout his early career and beyond. At TomWaterhouse.com, he had to quickly adapt to the fast paced environment of professional life under one of the industry’s most talented bookmakers. He says: “It truly had that feel of a 1980s Wall Street. It was a bit old school and really pressurized. I really thrived in that environment and learned so much off Tom. I learned to be measured, disciplined under pressure, to be emotionless when it comes to how you trade risk, and to not put the business in a position where everything hinges on one or two races. I guess I really learned the fundamentals of what separates a recreational bettor from a sharp bettor.”
I focussed on hiring people who are smarter and more experienced than me in their fields of excellence. As a group, we truly complement each other. There is a huge amount of trust among the management team at PointsBet.
TomWaterhouse.com was acquired by William Hill at the end of 2013 as the global betting operator pursued an aggressive market entry strategy into Australia, also purchasing leading brands Sportingbet and CENTREBET. It was during this period that Aitken learned valuable lessons he still holds on to today. The executive explains how TomWaterhouse.com’s reliance on vendor technology became the business’ most significant failing. To this end, Aitken adamantly opposes outsourcing sportsbook technology to third party suppliers. Later in our conversation, it becomes clear that this is one of the traits that first attracted him to PointsBet, as an operator dedicated to developing and managing its own sportsbook technology.
Aitken was asked to join William Hill after Waterhouse took over as the business’ CEO in Australia. Ultimately, he ended up overseeing all of trading, operations and quantitative analytics for the British bookmaker’s venture. By the end of 2017, he was in charge of a team of 150 people, but the writing was on the wall for the operator in the Australian market. Its brand had struggled to resonate with the country’s bettors and, as a result, William Hill drew a line under its trip Down Under, selling the business to CrownBet for AU$314m.
Once Aitken had gained significant experience with Tom Waterhouse and William Hill, he was ready for a new challenge. There were a number of factors that led him to PointsBet. Chief among these was the appointment of Sam Swanell as CEO of the company. The pair had worked for Tom Waterhouse together in the early years, and Aitken clearly still holds a lot of respect for him, who he described as “a super savvy guy.” Swanell offered Aitken the COO role, allowing him to move back to his childhood home of Melbourne at the beginning of 2018.
As we begin to discuss PointsBet’s eventual focus on the US market, it’s clear that Aitken’s love for US sports also played a significant role in his decision to join. A keen NBA fan, he fondly recalls receiving the number 33 jersey of New York Knicks star Patrick Ewing for his seventh birthday. Aitken is not alone as a US sport fan heralding from Australia, particularly when it comes to betting. In recent years, the North American Major Leagues have surpassed Australian sports in the nation’s betting figures.
For a sports betting company born out of such a US-focused environment, the potential repeal of PASPA in 2018 was always guaranteed to generate excitement for PointsBet’s executives. During this time, Aitken and Swanell travelled back and forth from the US to Australia as they prepared for PointsBet’s entry. As an Australian company, the executives knew that it was paramount to form relationships with commercial casinos. This would ensure their competitiveness once the bidding processes began.
Entering the US at such an early stage in the company’s development was a big risk. Around the time of PASPA’s repeal, the company had 50 staff globally, and had only accepted its first fixed-odds sports bet in recent months. Aitken explains: “In hindsight, it was very ambitious, the fact that we thought we could come over to America and get into these rooms with commercial casinos, tribal casinos and race tracks, then go up against Bet365, Ladbrokes and every multi-billion dollar market cap gaming company. But at the end of the day, the quality of the people, owning our technology and our point of difference set us apart.”
I learned to be measured, disciplined under pressure, to be emotionless when it comes to how you trade risk, and to not put the business in a position where everything hinges on one or two races. I guess I really learned the fundamentals of what separates a recreational bettor from a sharp bettor.
This point of difference Aitken mentions? PointsBetting, otherwise known as spread betting. This is a form of betting in which the wager pay-off is based on the accuracy of the bet rather than on a win or a loss. Although a well-known form of betting in certain markets, PointsBet was the first to introduce spread betting to Australia. After generating significant success there, the operator was able to recreate that market-first introduction in the US. This allowed PointsBet to stand out from the crowd, providing the operator with a vital leg-up in the race for casino partnerships.
After deciding to make the leap across the Pacific, Aitken and Swanell secured their first market access deal with Meadowlands in New Jersey. Within four or five months of this New Jersey launch in January 2019, the operator had gained around 5% of the online market share, placing PointsBet fourth in the state behind FanDuel and DraftKings. After achieving such success in New Jersey, the operator was able to acquire market access deals in a number of other states. Last year saw the launch of PointsBet’s first ever retail sportsbook in Iowa, and the operator aims to launch its first retail sportsbook in Illinois imminently.
When PointsBet first entered the market as a foreign company with no brand-awareness, its position today must have seemed far from reach. However, the operator employed a simple but effective tactic to overcome what Aitken describes as a “David versus Goliath” situation. “We saw a sea of sameness when it came to price, very little promotion and very average user interfaces,” he explains. “We achieved success off the back of an intense US focus, and knowing when to use price or promotion as a lever.”
One example of PointsBet’s promotional capabilities lies in its establishment of a Karma Kommittee in the early days of US development. Two weeks into its New Jersey launch, the operator made the headlines after refunding bets on a blown call in an NFL play-off game. The story was covered by both CBS and Good Morning America, providing vital brand-awareness at relatively low cost. Aitken describes this as a real “shot in the arm” in the early stages of the company’s US promotion.
Although PointsBet made its name on the sports betting market, the company has also made significant strides into the world of online gaming. Recognizing the potential value of the US’ online gaming market, the operator has made considerable investment into this area in recent months. As a result, the operator’s online gaming offering is set to go live in Michigan in the early part of 2021, and Aitken is very confident that the company can make serious headway in this area in coming years.
A large part of this confidence lies in the two men in charge of PointsBet’s online gaming expansion. Manjit Singh, PointsBet’s president of global products and technology, was previously global CTO for Aristocrat. As a key member of the gaming supplier’s development, Singh was integral to the rapid-growth of Aristocrat in its formative years. Meanwhile, Seth Young, chief innovation officer at PointsBet, is deeply connected in the US gaming space, having formerly been employed by both Flower City Gaming and Foxwoods Resort Casino. “With those two guys in the driver’s seat, I feel so confident in what we can achieve,” Aitken says.
We saw a sea of sameness when it came to price, very little promotion and very average user interfaces. We achieved success off the back of an intense US focus, and knowing when to use price or promotion as a lever.
Surrounding himself with talented team members like Singh and Young is something Aitken attributes much of his success to over the past few years. When asked about his strategy for leadership, he admits that his style hasn’t always been so trusting. In the early stages of his career, Aitken would often micromanage those beneath him. But when tasked with compiling PointsBet’s US team, he employed a different strategy. “I focussed on hiring people who are smarter and more experienced than me in their fields of excellence. As a group, we truly complement each other. There is a huge amount of trust among the management team at PointsBet.”
So what’s next for PointsBet? Although the pandemic may have temporarily applied the brakes to the operator’s year, Aitken insists it hasn’t been detrimental to the company’s progress. Demonstrating its increased brand awareness, PointsBet’s turnover has continued to see growth year-on-year, with a rise of 60% for Q4 2020 of the company’s fiscal year, a total of AU$349.4m. Turnover for the full-year was $1.2bn, more than double 2019’s tally, with Australia and the US contributing $830.5m and $321.1m respectively.
Although there has been continued growth, COVID-19 and the subsequent cancellation of most major sports events has certainly offered the operator a chance to collect its thoughts and take a breath. For the time being, PointsBet has been focussing on recruitment in technology, taking advantage of a growing pool of talent as other companies let employees go, and of course, improving its product for the imminent return of sports.
It really seems that Aitken is an executive living his childhood dream. From visiting race tracks with his father as a young boy to securing a position at the forefront of the US sports betting scene. Throughout our conversation, it’s apparent that this was the industry Aitken was born to work in. With such passion fuelling North American expansion, PointsBet’s chances of continued US success are sky-high.