Punting upstart BlueBet eyes lucrative US market

Mr Sullivan said BlueBet had almost finalised its first wagering licence and should start taking bets early next year, although he declined to name which state until the deal was complete.

“We are virtually done – it’s basically a handshake over the telephone and we’re just waiting on some legal documentation,” he said.

“The minute I take the first bet over there, my technology is proven… my people are proven, then I can go to these mid-tier casinos and say: I’ve got the licence, we’re betting, I want to talk to you about a joint venture.”

Casinos’ marketing reach and customer databases will give BlueBet a chance against the world’s biggest gambling companies, Mr Sullivan said, even with its relatively small capital backing.

“I’m more than happy to be working at that [lower] end of the market – it’s highly profitable,” he said. “There will be a land-grab but that doesn’t mean there wont be opportunities down below that.”

BlueBet CEO Bill Richmond, who worked under Mr Sullivan at Sportingbet, will lead the US attack while former Seven West Media Tim Worner has joined as a director. Mr Sullivan will be executive chairman.

BlueBet is looking to raise $80 million through its IPO, with a $30 million payday for Mr Sullivan and his management team, which will continue to own 42 per cent and 19 per cent of the company respectively. Of the remaining capital raised, $30 million will go into the US expansion in a “capital light” approach.

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“That’s more than enough for the strategy that we want. We’re not betting the farm on it,” Mr Sullivan said.

The other $20 million will go into marketing to grow its local operations. Mr Sullivan said there were opportunities for smaller players out of the market’s recent consolidation (Sportsbet absorbed BetEasy last year, for instance) given punters liked to have multiple accounts with different bookies.

Further consolidation could be afoot with Tabcorp fielding offers for the TAB, which is still the country’s biggest bookmaker, from parties including Ladbroke’s British owner Entain. Mr Sullivan said that would be a distraction for the industry and personally hoped the struggling TAB stayed in Tabcorp’s hands.

“We’ve all grown our businesses on the incompetency of the TAB,” he said.

BlueBet is forecasting $36 million in revenue and a $21 million profit for the 2021 financial year, according to a copy of its prospectus seen by this masthead. It says the public offer will open on Thursday with $70 million worth of shares available at $1.14 each The offer is valued at 4.9 times enterprise value to forecast 2021 net revenue, the document says.