If you left the sportsbook with a lighter wallet or needed to make a few more deposits into your mobile sports wagering account over the past 12 months, chances are you were not alone.
A comparison of periods covering July 2021-June 2022 against July 2022-June 2023 saw almost every state of the two dozen-plus reviewed had notable increases in operator holds. That led to a staggering rise in revenue, even in states where sports betting handle for the recent 12-month period showed a decline.
Overall, 26 states were reviewed and 19 of them conducted legal wagering long enough for full 12-month periods of comparisons. Arizona, South Dakota, and Wyoming had 10-month spans of comparison, while Connecticut numbers were scrutinized over a nine-month period.
In the cases of Arkansas, Louisiana, and Maryland, the comparisons are not like-for-like as each state expanded into mobile wagering during these spans. Louisiana’s length of comparison is eight months; Maryland has seven months available.
New York‘s span of comparison was six months to create a like-for-like environment following its mobile launch in January 2022. Kansas, Massachusetts, and Ohio‘s figures were included in national overall totals for the table below but not for comparison purposes, as all three states had less than 12 overall months of wagering at the end of June.
The top-line national numbers
As the past 24 months show in the table below, sports wagering is plenty popular in the U.S. The combined $183 billion-plus handle from July 2021-June 2023 represents more than 70% of the all-time post-PASPA handle, which recently crossed $250 billion for commercial betting.
The increases in handle and revenue in the second 12-month period are inflated to an extent given Ohio and Massachusetts were not conducting wagering in the 2021-22 period, and those states have quickly made themselves fixtures in top 10 monthly national handle totals. But the national hold even without the trio is still easily north of 9%, landing at 9.16% on $95 billion wagered.
Sign Up For The Sports Handle Newsletter!
The $100-billon plus wagered in the second 12-month span offers confidence 2023’s full-year handle will also reach that benchmark for the first time post-PASPA. And with a current win rate above 9.4% among states that publish both known handle and revenue figures, sportsbooks are on track to easily post a hold at least one full percentage point higher than the current record of 8.1% attained in 2022.
Scanning the nation
There are many things that stand out in this table, but the one that jumps out most is how the industry standard hold of 7% has been rendered outdated.
Nevada is the only state that falls short of that mark, but Colorado is the only other state under 8%. Everywhere else reads like results from judging Olympic gymnastics — a lot of high 9s and more than a few 10s, as 11 states had double-digit holds and three others came within one-tenth of a percentage point of that mark.
Also of note are the nine states that had a decline in handle for the second 12-month period compared to July 2021-June 2022, yet still had increases in revenue. New Jersey and West Virginia pulled off an impressive anomaly — having handle decline year-over-year by a double-digit percentage but having revenue increase by a double-digit percentage. The Garden State doing so as the No. 3 market nationally resulted in an increase of $139 million.
Perhaps more impressively for operators (or unimpressively for bettors, depending on one’s perspective) is that seven of those states had double-digit percentage gains in revenue. Mississippi being one of the two states that did not accomplish this feat is unsurprising given the Magnolia State does not have mobile wagering and its hold was already lofty for the first 12-month span at 10.5% before climbing to 11.9% in the second.
It’s notable how well DraftKings performed in New Hampshire and Oregon, states where it has a monopoly as the operator of the state lottery. New Hampshire’s increase of hold by more than 3.2 percentage points ranked third among all states overall, while the rise of close to 2.5 points in Oregon ranked eighth. Both states saw significant year-over-year rises in revenue, with Oregon’s 82.8% surge tops among states with full 12-month comparisons available.
A comic footnote: Louisiana’s year-over-year decline in hold can simply be explained by Jim “Mattress Mack” McIngvale. The Houston furniture magnate’s cashing of Astros futures after they won the 2022 World Series sent the Bayou State to the largest single monthly loss in the post-PASPA era at minus-$25.3 million. Had the Phillies topped the Astros in last year’s Fall Classic, the resulting $58.7 million swing in the house’s favor would have meant Louisiana sportsbooks posting a 12.6% win rate for the most recent 12-month period and a near-doubling of gross revenue at $228.6 million.
A pounding in parlays
28.8% handle/56.5% revenue
24.5% handle/57.3% revenue
New rule: If YTD parlay hold is ≥ 20%, you get the Twellman gif:
— Chris Altruda (@AlTruda73) July 14, 2023
Though the snapshot for parlay wagering is not a full one as only six states provide monthly handle and revenue figures, the states publishing those numbers provide anecdotal evidence that it continues to grow in popularity. It also showed bettors fared significantly worse in the second 12-month period than the first and, at least in Illinois with 12 consecutive months of 20%-plus holds, FanDuel has ruthlessly cemented its status as first mover and marketplace leader.
There are three things that need to be remembered when looking at these states’ numbers. The first is that Nevada, despite its status as a top-five market nationally, is not a place where much parlay wagering takes place. That is partly due to the higher rate of in-person wagering on the Las Vegas Strip.
There are three reasons for Illinois’ massive jump in parlay handle. One is Caesars Sportsbook not accepting parlay wagers until February 2022. A second is BetMGM entering the state as a mobile option in March 2022. And specific to the last 12 months. BetRivers has greatly increased its market offerings for parlays — its $112.6 million in 2023 handle is already 67.7% higher than all of 2022 and on pace to increase nearly four-fold.
Oregon wagering is exclusively on pro sports. While the types of parlay markets may be extensive, some of the multisport-building options are limited without the ability to add college sports. As such, it is a credit to DraftKings’ marketing strategies it was able to get the public to wager a higher percentage of overall bets on parlays as well as produce a greatly increased handle for those bets.
Bettors lost more in the second 12-month span based on the increased holds across the board in the six states, and this trend may not change anytime soon. The rise of same-game parlays (or SGPs) has helped fuel a subset of parlay wagering that is much like the sports betting version of the lottery.
The availability of SGPs as a low-denomination wager that fosters creativity in the building process gives bettors ownership that a “Quick Pick” lotto ticket cannot. And with that comes a mindset that encourages bettors to try again when they fall short on a potentially lucrative parlay.
The mindset is typically not, “I lost a $5 parlay,” but rather, “I came within one leg of winning $100 on a five-leg parlay.” Wagering losses of $1, $5, or even $10 do not sound like much when seen in isolation, but the volume of people playing them has increased and the increased volume of losses has driven both the hold and operators’ bottom lines higher versus the hold and revenue totals that would come with more single-event wagering.
Smaller gains by house in single-event betting
Not all the increased sportsbook revenue is coming from parlays. Keeping with those six states that publish parlay figures as a point of comparison, we see that even though the betting public is halfway decent when it comes to single-event betting, the house also made gains there in the second 12 months.
In every state but Mississippi, the hold for single-event wagering in both periods was below 7%, but the spread between the overall and single-event holds in the second 12 months increased in conjunction with the higher holds from parlays. Nevada proved the exception to this, but as shown in previous tables, its parlay totals represent a very small sliver of wagering activity compared to the other five states.
The big winners? State governments
The increased revenue of sportsbooks over the recent 12-month period accelerated the path to profitability for online titans FanDuel and DraftKings, but state governments also saw a notable inflow of tax revenue into their respective state coffers. The lone exception among the 26 states reviewed was Delaware, which is now completely surrounded by jurisdictions with mobile betting and unable to offset a dramatic 34.1% drop in handle.
The amounts varied across the nation, but 11 states had tax revenue increases of $10 million or more in the comparable periods. New York led the list with a jump of nearly $106.2 million in the six-month periods studied, the by-product of its 51% rate. The state with the second-highest tax rate, Pennsylvania, was No. 2 at $57.9 million, and Illinois was next with an additional $49.8 million. The $1.9 billion in taxes created overall nationwide for the 12-month span that ended this June was more than double the amount accrued from July 2021-June 2022.
The evolution of wagering coupled with marketing by operators to continue promoting parlay play will further this trend of high holds. Add in deep-pocketed mobile books bet365 and Fanatics entering more marketplaces with unique variations on a proven successful playbook, and the question may not be whether the house can maintain that 9% hold, but if it can push it even higher.