Posted on: March 1, 2023, 06:30h.
Last updated on: March 1, 2023, 04:45h.
Sports betting in the Buckeye State got off to a big start in January, according to the revenue report released Tuesday by the Ohio Casino Control Commission (OCCC).
Operators reported a handle of $1.11 billion for the first month of legal sports betting in the state. Bettors wagered all but roughly $23 million of that through online apps. Only New York’s $1.79 billion handle topped Ohio’s for the month.
The 16 online sites and 14 retail sportsbooks posted revenues of $208.9 million, although that figure does not take into account the $320 million in promotional credits online operators awarded to bettors and were used in January.
Ohio does not currently allow sportsbooks to deduct promotional gaming credits from their taxable revenue. So, the state received $20.9 million based on the 10% tax lawmakers established when they passed the sports betting law in December 2021.
Last week, the Ohio Lottery announced the first revenue report from sports betting kiosks that have been installed in various bars, restaurants, and other qualifying establishments across the state. The 772 kiosks took a total of $850,336 in bets in January. They combined for $116,040 in gross gaming revenue, with the Lottery capturing $28,376 of that.
With the long-awaited first report finally out, here are five things that stand out to me from the first month of sports betting in Ohio.
Online, Online, Online
When lawmakers in the Ohio Legislature drafted the legislation in 2021, they made it clear they saw sports betting as an economic development tool. That’s why retail sportsbooks played a prominent role, as legislative leaders believed they could help spur tourism across the state.
That focus seemed to go against the conventional wisdom that online apps would dominate the market, as they have in other states.
In January, Ohioans – as well as those coming from Northern Kentucky to place wagers – showed they have a strong preference for betting online. Nearly 98% of the money wagered was wagered online. That’s a higher percentage than Pennsylvania (93.2%), New Jersey (93.9%), and Indiana (93.2%) reported for the month.
Barstool, Bet365 Crack Ohio’s Top Five
To no one’s surprise, FanDuel and DraftKings dominated the Ohio scene, much like they do in other states where they’re licensed. FanDuel’s $494.2 million handle represented 45.3% of the online market, while DraftKings commanded a 31.6% share with its $344 million handle.
But there were a few surprises further down the list. Most notably, after BetMGM’s $82.1 million handle, Barstool Sportsbook came in fourth in handle at $45.9 million, followed by Bet365’s $38.6 million.
Caesars Sportsbook came in sixth at $31.5 million.
Bet365, considered one of Europe’s top operators, was the most reliant on promotional credits to drive traffic. The $16 million in credits and bonuses wagered represented 41.4% of its monthly handle. That was the highest ratio of any sports betting operator in Ohio.
Meanwhile, Caesars and Barstool were less reliant on promotional credits, as those made up less than 12% of their reported handle. That was significantly lower than the state average of 29.4%.
One industry executive found the disparity interesting.
These (numbers) give us a look at the (now) different strategic approaches to marketing and promotional (dollars) awarded as a (percentage) of handle and revenue in a sports-only state launch,” Hard Rock Digital President Matt Primeaux tweeted Tuesday.
Bet365 wasn’t the only one that used promotions to boost its handle. Tipico enhanced its $10.7 million handle with $3.8 million in credits. At 35.5%, the German-based operator had the second-highest ratio.
FanDuel (34.1%) and BetMGM (33.3%) also relied significantly on credits, while DraftKings’ promotional credits represented just 25.2% of its handle.
Most Sportsbooks See Red in Ohio
Thanks to the $320 million in promotional bonuses awarded and wagered, only two of the sportsbooks remained in the black after taking into account that spending.
One was Caesars, which netted $413,450 for the month. It indicates a near-180 for the Las Vegas-based gaming giant from the strategy it employed a year ago. Last year, it relied heavily on bonuses to become the early leader in New York. Yet, Caesars later cut back on that spending to make its online gaming division profitable. Caesars executives believe the company can achieve that this year.
The other operator to stay in the black was Betr. The start-up microbetting venture launched by Jake Paul and Joey Levy had the third smallest handle of any online operator at $1.1 million – and that could be attributed to a late official launch last month – but it finished the month with net revenues of more than $11,000 after reducing promotional spending.
FanDuel and DraftKings amassed most of the promotional spend, with FanDuel’s totaling $168.7 million and DraftKings allocating $86.7 million. After factoring in the promotional credits wagered, FanDuel had a net loss of $65.4 million, and DraftKings had a net loss of $31.6 million.
What Spurred Barstool’s Success?
Barstool’s performance should not necessarily come as a surprise. That’s despite many analysts seeing the Penn Entertainment brand as a disappointing performer in sports betting. Penn has been unable to parlay Barstool Sports’ audience to turn the sportsbook into a major player that can compete with FanDuel and DraftKings.
While Barstool still trailed FanDuel, DraftKings, and BetMGM, its fourth-place showing is respectable. However, at the same time, it might not necessarily be because of the Dave Portnoy media enterprise.
The likely reason for Barstool’s success in Ohio may be Penn’s presence in the state. The gaming company has Hollywood Casinos in Columbus and Toledo and two video lottery terminal racinos carrying the Hollywood name in Dayton and Youngstown. No other operator had that kind of statewide presence before sports betting went live.
More to Come in Ohio
While Ohio held a universal launch date on New Year’s Day for online operators, retail sportsbooks, and kiosks, there are still several licensees waiting to make their debut.
Chief among them is Fanatics, the online sports apparel retailer that wants to make a big splash in gaming.
In addition, several hundred kiosk locations are still waiting to jump into the game. That includes supermarket chains Kroger and Giant Eagle. Although, it’s fair to wonder if retailers will question whether hosting a kiosk is worth it, considering the infinitesimal market share the kiosks garnered last month.