Ohio’s first month of legal sports betting took the industry by storm, posting $1.11 billion in total handle and a national record $208.9 million in gross revenue in the month of January.
Friday afternoon, the Ohio Casino Control Commission is expected to release February figures indicating the extent to which that first month may have been inflated by pent-up demand, promotional credits, and other factors.
As surprising as the first month’s numbers were, it would be more shocking if they were matched in the second month. For starters, there were three fewer days in February and there was far less football being played to attract betting action, even if the Super Bowl attracts more wagers than any other single game in any sport.
In New York, New Jersey, Nevada, and Pennsylvania — the states among national sports betting leaders that have already reported February data — the average decline in handle was 23% from January.
On top of that, there’s the question of how much in promotional credits Ohio’s 17 mobile sportsbooks gave away in February compared to the massive $320 million in January volume. They always compete heavily at the outset for new customers and were willing to give away a combined $114.3 million more in bonuses and credits than they received in revenue.
Though there are also 14 retail sportsbooks at casinos, racinos, and sports venues, it’s the mobile sites that sway the numbers. The 16 online sites operating in the first month — betPARX has since launched, but it is unlikely to be a huge factor in February’s numbers — took 98% of the total $1.11 billion in January bets.
With reduced giveaways to take advantage of, Buckeye State bettors would have been less incentivized in February to wager as much as they did the month before, particularly as the biggest such offers favor first-time customers over existing ones.
The top-heavy competition
Aside from overall numbers, it will be interesting to see how the competition shakes out among the many operators on a long-term basis. Ohio’s first month was very top-heavy, a phenomenon that has been common in many states where legal betting has launched.
As is often the case elsewhere, FanDuel and DraftKings quickly dominated the state’s market. With combined online handle in January of $838.2 million (FanDuel was the bigger book with $494.2 million), the pair claimed 76.9% of all bets. At the same time, their combined $255.3 million in promotions represented nearly 80% of all credits, so their February handles almost assuredly dropped significantly along with their giveaways.
There was a middle ground among operators in January of six with handle between $10 million and $100 million each. Ranked in order, BetMGM, Barstool Sportsbook, bet365, Caesars Sportsbook, Hard Rock Digital, and Tipico represented 21% of all bets, with a combined $229.6 million.
Fully half of operators posted handle of less than $10 million each, and together, they accounted for a total of $22.5 million, or barely 2% of the overall mobile market. PointsBet was easily the biggest among those, with $7.5 million, followed by betJACK, Betfred, BetRivers, SuperBook, Betr, Betway, and MVGBet.
What did they take from bettors?
In addition to reporting February handle Friday afternoon, the casino commission will show the month’s revenue, an aspect of Ohio’s start that was even more astounding in January than the overall betting volume.
The $208.9 million in gross revenue by all online and retail operators far exceeded anything seen in any state before, even in much bigger New York. It came from an 18.8% hold rate (meaning the extent to which bettors lost on their wagers) that is at least twice what operators normally hope for — and thus would be unlikely for them to duplicate in February’s numbers.
But even if their hold rate declined, a monthly reduction in their giveaways could make it a lot more likely they achieved a positive revenue stream in February, unlike January. Only Caesars and Betr in the first month reported more in revenue than credits, and presumably there were more than two operators in that category in February.
Whatever the case, whether the numbers are good or bad for the operators, they are certain to capture attention across the industry. And they will again benefit Ohio’s state treasury, which claims 10% of gross revenue from its tax rate.
Government officials just shouldn’t count on that number in February to match January’s $20.9 million, or come anywhere close to it. It was likely less than half that, based on February’s gross revenue reports from sports betting of $54.6 million in New Jersey and $62.2 million in Pennsylvania.
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