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PointsBet share price rockets 32% higher on U.S. update

The PointsBet Holdings Ltd (ASX: PBH) share price is rocketing higher on Wednesday following the release of an update in relation to its U.S. operations.

At the time of writing the sports betting company’s shares are up 32% to $1.70.

What did PointsBet announce?

This morning PointsBet announced that its wholly owned subsidiary, PointsBet Colorado, has been issued two new licenses in the United States.

According to the release, the company has received an Internet Sports Betting Operator License and a Sports Betting Operator License by the Colorado Limited Gaming Control Commission (CLGCC). Management advised that the initial term of these licenses is until March 2022.

In addition to this, PointsBet’s partner in the State of Colorado, Double Eagle Hotel and Casino, was issued a Master Sports Betting License by the CLGCC in February.

PointsBet will be operating both online and retail sportsbooks in Colorado and anticipates taking its first bet in the second half of the calendar year.

What is happening at PointsBet right now?

Behind the scenes the sports betting company appears as busy as ever with license deals.

However, on the customer side, the company is experiencing an unprecedented decline in activity due to the suspension of sporting events globally.

Earlier this month the company responded to the suspension of major US sporting events. It reassured shareholders that it is well-placed to weather the storm due to its sizeable cash balance.

At the end of December PointsBet had A$147.9 million of corporate cash on the balance sheet, with the majority of it held in US dollars. The company also pointed out that it has no borrowings or debt on its books.

Another positive during these difficult times is that its marketing costs are predominately variable in nature. This means that PointsBet has the flexibility to adjust and optimise its marketing spend given the developing circumstances.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.