Interactive

US – Online casinos generate record revenue in Pennsylvania

By Phil - 19 May 2020

Pennsylvania’s sportsbooks generated just a fraction of the bets that they would have expected during a normal April, while online casinos and poker rooms smashed their revenue record with $43.1m. That divergent path—which includes an estimated loss of more than $300m in sports bets, according to PlayPennsylvania estimates—will continue as long as most major sports and the state’s land-based casinos remain closed.

“The growth in online gambling as well as betting on non-traditional sports are industry bright spots,” said Dustin Gouker, lead analyst for PlayPennsylvania.com. “But there just isn’t any way for Pennsylvania operators to compensate for such a dramatic loss of revenue, including at retail sportsbooks and land-based casinos, which can’t generate a single dollar right now.”

During a month in which PlayPennsylvania.com would have estimated a handle of nearly $350m, Pennsylvania sportsbooks generated just $46m in wagers, according to official data released Monday. That is down from $131.3min March, though up slightly from $36.8m in April 2019, before online sports betting launched.

Sportsbooks yielded $3.2m in gross revenue, up from $8.6m in March. The win resulted in $988,255 in state taxes.

Before the COVID-19 shutdowns, Pennsylvania’s sportsbooks had grown from a 2019 low handle of $31.5m to a record $348.4m in January 2020.

“The momentum that brought records month after month for Pennsylvania’s sportsbooks has been reversed almost instantly,” said Valerie Cross, analyst for PlayPennsylvania.com. “Until sports leagues figure out a way to reopen, these dreary results will continue.”

With retail sportsbooks shuttered in April—potentially losing out on some $35m of in-person bets—online sportsbooks generated Pennsylvania’s entire handle. FanDuel Sportsbook at Valley Forge Casino led the market in April with $19m in April wagers, down from $53.7m in March. That yielded $1.3 million in taxable revenue, down from $2.8 million in March. FanDuel was followed by DraftKings at The Meadows, Rivers Casino Philadelphia and Fox Bet at Mount Airy Casino Resort.

Limited to futures betting and action on nontraditional sports, Pennsylvania’s online sportsbooks are arguably faring better than might have been predicted. And sportsbooks could be getting some help from more mainstream sports soon, with auto racing restarting, golf planning on teeing off in the coming weeks, and Major League Baseball inching closer.

“A $46m handle with such limited options in terms of sports is a surprise,” Mr. Gouker said. “April could potentially be the statistical low point, but there is so much that can happen that the immediate future is impossible to predict. That is a bit disconcerting for operators.”

Online casinos and poker rooms brought good news for the industry, combining to generate a whopping $43.1m in April revenue. That was up 77.4% from the record $24.3m in March and 121 per cent over February’s $19.5m. As many of Pennsylvania’s gamblers stayed home and land-based casinos remained closed, casinos and poker revenue hit $1.4m per day in the 30 days of April, up from $782,768 per day in March.

Online table games and slots generated $1.4bn in wagers, up from $871.6m, producing $37.8m in revenue. Mount Airy/PokerStars—the Keystone State’s only online poker room—generated a record $5.3m in revenue, beating March’s $3.1m and edging New Jersey for the online poker revenue record for any state.

As welcome as the rise in online gambling revenue has been, it can’t nearly make up for the lost revenue from land-based casinos. The $23.6m revenue difference between April and February, represents just 8.5 per cent of the $277.8m on slot machines and table games revenue generated by land-based casinos in April 2019.

“There will likely be long-term implications from this surge in online gambling interest. A behavioural shift that makes online gambling permanently more popular is likely to continue even after casinos reopen,” Cross said. “But the reality is that despite the gains made at online casinos, the closing of land-based casinos left a revenue hole that can’t be made up.”

Rivers-Philadelphia led the online casino market with $13.7m in revenue on $477m in wagers, up from $6.8m in revenue on $293.2m in wagers in March. FanDuel/Valley Forge Casino was second with $7.9m in online revenue on $320.8m in wagers, up from $5m in revenue on $250.6m in wagers in March.

In addition, the number of online casinos in Pennsylvania grew to 10 with the launch of Caesars in April and DraftKings in early May, expanding the FanDuel-DraftKings rivalry beyond sports betting.

“The competition between FanDuel and DraftKings has been a force for innovation in sports betting markets across the country, and we expect that will transfer well to their online gambling products,” Mr. Gouker said.