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The start of the NFL season is also the unofficial start of sports betting season in the US. Summers are largely devoid of major sports to bet on. Major League Baseball, golf, and tennis are all modest revenue producers, but they are not really needle movers that football is for gambling.
For operators, football represents the most-important touchpoint for customer acquisition. That’s why despite all the talk of a “pullback” on advertising and marketing spend this NFL season, it’s hard to see much actual evidence of that (at least anecdotally). There are still online casinos for real money, too.
Aside from that, infinity money has been spent on commercials for a different purpose — the two propositions in California that would legalize some sort of sports betting, either retail sportsbooks only or a wider expansion including online betting.
Right now, conventional wisdom, polling and handicapping all say California will not legalize online sports betting in November. That would be especially frustrating considering the hundreds of millions of dollars that have been spent lobbying the electorate on the two propositions. Residents will be the first to tell you how they’ve been bombarded with ads in recent weeks.
California also brings up the idea of the sports betting map and where things sit for various states. Maryland, after years of stops and starts, looks like it should have some online sportsbooks up and running by the end of the year. Massachusetts’ launch is still TBD (likely early next year), while Ohio chugs along toward its planned Jan. 1 launch.
Once these markets are active, sports betting will be legally and locally available to around 60% of all adults in the country.
October sports betting headlines
One indication that the US sports betting market beginning to mature can be found in the major talking points, which have become more interesting and nuanced over time. The operator power rankings are mostly steady for now, and we’ve finally stopped ooh-ing and ahh-ing over the way FanDuel and DraftKings are performing in this space.
Responsible gambling has thankfully become a big topic of conversation this fall, including a new 12-point platform ratified by many of the largest US brands. Operators now have a unified set of standards tied to detecting and addressing problematic behavior, including underage and above-your-means gambling. Some of this is likely lip service and good PR, but It’s truly in everyone’s best interest to make a serious commitment to responsible gambling.
That commitment becomes even more crucial as marketing graduates to another level. Gone are the days of cookie-cutter television ads and cheap billboards in seedy NJ transit stations. DraftKings is now the sponsor of Thursday Night Football on Amazon Prime, which itself is an indication of how times have changed in these sports-adjacent industries. BetMGM also has a new role as the official odds provider for NBC’s weekly coverage of Football Night in America, replacing PointsBet on the Sunday broadcast in another highly coveted (and highly expensive) deal.
It might seem contradictory, then, to say that profitability has become another big topic of conversation around the sports betting water cooler. The absurd promotional spending, particularly in New York, seems to have reminded everyone that the largest operators are still hemorrhaging money despite winning hundreds of millions of dollars from their customers every month. The path to profitability is a critical journey for these national brands and for the long-term sustainability of the industry as it exists today.
The US still has a long way to go before it can be considered a mature sports betting market, but these types of conversations are an apparent indication that we’re headed that way.
US gambling financial report
Football is back, baby!
The arrival of the most popular sport in the US is a gift for bookmakers, signaling the start of a months-long surge in betting activity. Weekly reports in New York and West Virginia show modest annual growth so far, though we’re still waiting for most of the September numbers to come rolling in.
The 31 states with legal sports betting are together hurtling toward a record $100 billion in handle for the 2022 calendar year. Our current target has moved just below that milestone ($97.1B), though the rate of growth (or decline) in maturing markets could shift that number as the season progresses.
More delays in Massachusetts are partially to blame for the adjustment, but August reports were also a bit weaker than we expected in some key markets. And early numbers from September aren’t exactly eye-popping either. The remaining financials for this past month will tell us a lot about what to expect for the rest of the year.
We’ll remind you again that the cycle of data reporting for sports betting is about a month behind the calendar. That means that we’re just getting the last few August reports as October begins. We’re also still waiting on August numbers from Arizona, Colorado, Illinois, and Wyoming, while the other states with no data do not publish regular financial reports.
Here’s what August looks like with the available numbers so far:
Total volume is up 50% from August 2021 even without the missing states, driven primarily by the launch of online betting in New York earlier this year. Arkansas’ big increase stems from the same reason, and the broad picture is one of tremendous growth.
It’s the isolated annual trends in a few maturing markets that give us a bit of pause.
New Jersey is clearly suffering the effects of its neighbor’s expansion, slipping 18% from the same month last year. The same can be said for the effect of Louisiana’s launch on Mississippi’s retail-only market. And Delaware is just struggling to stay relevant as its neighbors continue to implement full-scale online betting. Nevada is even feeling the heat from the launch in Arizona, along with the general increase in the number of US jurisdictions in which sports betting is legally available.
Oregon is worth a rare positive mention, on the other hand, up almost 60% from last year. The big difference for Oregon in 2022 is the replacement of the old Scoreboard platform with the superior DraftKings product (and the marketing machinery that comes along with it). It remains the only state without any betting on college games, but regulators in Oregon have at least managed to address one of the issues that was hampering the local industry.
You can find a complete timeline of sports betting revenue for all US markets at playusa.com/revenue.
What We’re Watching
Massachusetts, Ohio launch
Rumors about a potential retail launch in September in Massachusetts turned out to be premature. In fact, it appears that we’re still months away from the starting line.
There’s a new problem too, or rather new confusion over the mechanics of licensure. Ryan Hagen described the issue for PlayMA:
The sports betting law allows the Massachusetts Gaming Commission (MGC) to issue licenses for the state’s casinos, simulcast centers, and slot parlors to take in-person bets. Those facilities can then partner with mobile operators. MGC can also award mobile licenses to up to seven independent companies – and that’s where problems have arisen.
At least 30 operators are expected to apply for the seven available independent licenses. While the operators wait for the seven permanent licenses to be awarded, they can qualify for a temporary license that could last up to a year and come with a $1 million fee. Officials are concerned that potentially dozens of temporary licenses will then be shut down when the official seven are chosen, causing chaos for the regulator, licensees, and the public.
The MA Gaming Commission has been meeting every week, and it’s fair to assume they’ll iron out this wrinkle before launch. But the fact that we’re having this type of major conversation about licensure doesn’t bode well for the timeline. We tentatively expect Massachusetts to launch in Q1 2023, though the exact timing and composition of the rollout are still very much undetermined.
Meanwhile, the timeline in Ohio has been set in stone for a while. New Year’s Day will be opening day come hell or hangovers, and regulators appear to be on track for an on-time start. More than two dozen brands and hundreds of brick-and-mortar facilities are lined up to participate in the broadest, most comprehensive rollout to date. Hard Rock already has a pre-launch offer available, in fact, hoping to get an early leg up in what figures to be a fiercely competitive market.
Keep a bookmark on PlayOhio for updates on the progress toward launch.
California sports betting showdown
It seems fitting to end once again with the sports betting referendums that are approaching in California. The two proposals are either competing or complementary, depending on who you ask. And interested parties on both sides have so far dumped more than $400 million into the lobbying effort.
For most tribal leaders and other proponents of Prop 26, defeating the opposing framework is as much of a victory as ing their own measure. The tribes look to tighten their grip on gambling in the state with a retail measure that would allow betting only on their native lands. ers of Prop 27 are meanwhile hoping to open the country’s largest online market by allowing statewide participation from the industry’s biggest brands. A breakdown of both propositions can be found here.
As with all gambling issues in California, the battle is especially fierce. Chatter around the Golden State is not favorable for either measure despite both having obtained more than a million signatures in preliminary . Recent polling shows approval hovering below 35% approval for Prop 27 and considerably less for the tribal measure.
At least for now, it doesn’t appear that New York is in any jeopardy of relinquishing its top spot on the US sports betting leaderboard.
