Ohio Sports Wagering: Key Insights from the Initial Earnings Summary
Ohio's sports betting kickoff in January brought promising numbers, as per the Ohio Casino Control Commission's (OCCC) report.
Operators reported a grand total of $1.11 billion in bets placed, with approximately $887 million wagered online via apps. New York's $1.79 billion handle remained the highest for the month, but Ohio came a close second.
The 16 online platforms and 14 physical sportsbooks generated a revenue of $208.9 million. However, this figure fails to account for the $320 million in promotional credits that online operators granted to wagerers during January.
Ohio authorities do not currently allow sportsbooks to deduct these promotional gaming credits from their taxable revenue, resulting in the state collecting $20.9 million based on the 10% tax rate established by the sports betting law passed in December 2021.
Last week, the Ohio Lottery publicized the first earnings report from sports betting kiosks located in various bars, eateries, and other eligible establishments across the state. These 772 kiosks accepted $850,000 in wagers in January and generated $116,000 in gross gaming revenue, with the Lottery capturing $28,000.
The eagerly awaited first monthly report has now been released, and here are five notable observations from sports betting in Ohio for the initial month.
Online, Online, Online Dominates
The Ohio Legislature's 2021 legislation made it clear that sports betting was viewed as an economic development tool. Retail sportsbooks were emphasized as legislative leaders anticipated they could encourage tourism throughout the state.
This approach appeared to go against conventional wisdom suggesting that online apps would dominate the market, as they have in other states.
In January, Ohio residents, alongside those traveling from Northern Kentucky to place wagers, demonstrated a strong preference for online betting. A staggering 98% of the money wagered was done so online, exceeding the percentages reported by Pennsylvania (93.2%), New Jersey (93.9%), and Indiana (93.2%) for the same month.
Barstool, Bet365 in Ohio's Top Four
As expected, FanDuel and DraftKings dominated the Ohio scene, much like in other states where they are licensed. FanDuel's $494.2 million handle accounted for 45.3% of the online market, while DraftKings held a 31.6% share with its $344 million handle.
Some intriguing surprises appeared further down the list. Most notably, after BetMGM’s $82.1 million handle, Barstool Sportsbook came in fourth with a handle of $45.9 million, followed by Bet365’s $38.6 million.
Caesars Sportsbook secured the sixth position with $31.5 million.
Bet365, one of Europe's top operators, relied most on promotional credits to drive traffic. The $16 million in credits and bonuses wagered accounted for 41.4% of its total monthly handle. This was the highest ratio among any sports betting operator in Ohio.
Meanwhile, Caesars and Barstool had comparatively less reliance on promotional credits, as these made up less than 12% of their reported handle. This was notably lower than the state average of 29.4%.
One industry executive found the disparity interesting.
These figures offer a glimpse into 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 on Tuesday.
Bet365 wasn’t the only operator that employed promotions to boost its handle. Tipico boosted 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 End Up in the Red
Thanks to the $320 million in promotional bonuses awarded and wagered, only two of the sportsbooks remained in the profit after considering this spending.
One was Caesars, which generated a net profit of $413,450 for the month. This indicates a nearly 180-degree turn from the strategy Caesars employed a year ago. In the past, it heavily relied on bonuses to become the early leader in New York, but later scaled back on spending to render its online gaming division profitable. Caesars executives anticipate achieving this goal this year.
The other operator to stay in the black was Betr. The microbetting start-up, founded by Jake Paul and Joey Levy, had the third-smallest handle of any online operator at $1.1 million and ended the month with net revenues of more than $11,000 after reducing promotional spending.
FanDuel and DraftKings accumulated 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 experienced a net loss of $65.4 million, and DraftKings faced a net loss of $31.6 million.
Despite trailing behind FanDuel, DraftKings, and BetMGM, Barstool's fourth-place standing is commendable. However, it's not certain that the triumph of Barstool in Ohio is solely due to the Dave Portnoy media conglomerate. Instead, the gaming firm's significant presence in the state, with Hollywood Casinos in Columbus, Toledo, and named racinos in Dayton and Youngstown, might be the key to Barstool's success. No other operator could claim a similar statewide footprint before sports betting officially commenced.
Further Developments in Ohio
Although Ohio set a universal launch date for online operators, retail sportsbooks, and kiosks on New Year's Day, several licensees are yet to debut.
Notably, Fanatics, the online sports apparel retailer aiming to make a significant impact in gaming, is one of the awaiting debutants.
Moreover, around 600 kiosk locations are holding back from joining the fray. This includes notable supermarket chains such as Kroger and Giant Eagle. While it's reasonable to question whether these retailers will find it worthwhile to host a kiosk considering the minute market share kiosks captured last month.
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