It is rare when a government agency undersells a financial projection, but give credit to the folks at the Ohio Legislative Budget Office, because they managed to do so in epic fashion when it came to year one sports betting handle.

Back in 2021, the state agency offered a projection of $1.1 billion worth of wagers for Fiscal Year 2023 — covering the first six months of the 2023 calendar year — based on a multi-operator mobile sports betting operator launch Jan. 1, 2023.

$1.1 billion. Total. For the entire six months. This was akin to giving an opponent bulletin-board motivational fodder, except it was there for 12 months as hype and anticipation would build until game day.

When Jan. 1, 2023, finally came around, Ohio bettors took that projected figure and needed a mere 31 days to surpass it when the Buckeye State debuted with $1.11 billion in wagers placed the opening month. Granted, that number was inflated due to a free-for-all among operators when it came to promotional credits and bonuses, but Ohio immediately became the fifth state with a $1 billion monthly handle to its credit.

January sent a message that the Buckeye State would be a big player in the U.S. sports betting space, which played out throughout 2023. It narrowly missed a top five spot for national handle and likely will cross over $1 billion in operator revenue when January’s numbers are totaled, offering a glimpse into what could be a big sophomore year as well.

Ohio really mattered to mobile operators

One thing a multi-platform launch in a new market can occasionally provide is a sense of how aggressive operators will be in attempting to gain a foothold.

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Ohio was long pegged as a state of importance because of its population size, which slots seventh nationally behind Pennsylvania and Illinois. There were clearly people in the region who wanted to wager, as evidenced by retail handle totals from both the Keystone State and Indiana, which had been taking wagers since 2019.

Operators knew this and threw open the vault in a bid to build and eventually retain a customer base. No sportsbook did this more than FanDuel, because the industry leader could afford to drop a proverbial Brinks truck or two based on its hefty winnings everywhere else in the country.

The mobile juggernaut did just that at launch with an otherworldly $168.7 million worth of credits given out in January. That would have ranked 17th as a state between Kansas and Connecticut as a standalone handle figure.

Other mobile books participated in the January arms race as promotional spend totaled $319.5 million. DraftKings and BetMGM were Nos. 2 and 3, as expected, with $86.7 million and $27.3 million, but bet365 proved to be the wild card with $15.6 million.

These operators continued to tend to their garden with more promotional offers throughout 2023. By year’s end, the quartet spent nearly $585 million in promotional credits and bonuses. FanDuel accounted for nearly half that amount with $261 million, but bet365 refused to back down as it finished third among mobile books in outlay with $78 million.

One could only lament what could have been had ESPN BET been present for the January launch, considering PENN Entertainment’s promotional spend of more than $40.3 million spanning November and December was more than 82% of its total outlay for 2023 and almost eight times the $5.5 million PENN spent promoting Barstool Sportsbook to open the year.

Overall promotional spend came within $1.7 million of $700 million, coming to roughly 9.1% of the $7.67 billion handle generated for the year. It is not expected that operators will come anywhere close to matching that in 2024, but with six operators still dishing out more than $1 million per month, there is still plenty of capital churning through the state for customer acquisition.

Operators performed at peak level in Ohio

The evolution of the sports betting space, which now emphasizes and promotes same-game parlays and regular parlays as a commonplace wager on equal footing with single-event betting, means operators should be posting higher win rates than the 7% industry standard that has proven to be outdated.

Still, no one expected Ohio operators to collectively post a 12% hold for the first 12 months of wagering, especially with a market so large where one bad month could drag down that figure substantially. It is far and away the highest hold of the nine states that posted at least $5 billion handle, with Virginia a distant second by at 10%.

Buckeye State betting apps haven’t followed up their record $209 million haul in January with a second month even above $100 million, but they cracked $80 million on six occasions while posting a 10% or better hold in every month but June (9%) and November (7.8%). The $938 million in adjusted gross revenue

Unexpectedly, FanDuel ran roughshod over the public most months in finishing with an 11% hold or better every month except November while crafting a 14.4% win rate overall for the year. DraftKings, which finished a hard second to FanDuel for handle and revenue, posted an 11.1% hold for 2023.

Bet365 proved its staying power went beyond simply flashing cash. The England-based book had holds of 8% or better all 12 months and finished at 13.4% thanks to a blazing first quarter. While its promotional spend exceeded its revenue by nearly 30%, bet365 looks to have solidified its status as a top-five option for Ohio bettors.

What to look for in 2024

The 2024 outlook begins and ends with ESPN BET and how long PENN Entertainment is willing to spend at a high level to build its customer base. December was a big step forward, as handle ticked higher and promotional spend plummeted while carving out space as the definitive No. 3 option.

ESPN BET’s promotional spend was still high in December — the $11.3 million led all operators, but it was less than FanDuel and DraftKings combined, as opposed to November. The question for it is whether the promotional spend accelerates ESPN BET’s path to its eventual end goal of 20% mobile market share, or if it can consolidate early and cut spending by retaining its customer base to achieve that same end goal.

On the surface, ESPN BET’s growth looks to be coming at the expense of second-tier operators, a group of peers that include BetMGM, Caesars, bet365, and Fanatics Sportsbook. Fanatics had it particularly tough in December among that four, as its handle plunged 25% when not including wagering through subsidiary PointsBet, raising the question of whether Fanatics will increase its promotional spend as a means of fighting back.

As the fight for hearts, minds, and wallets continue, it is likely operator success will not slow down anytime soon, so expect more 10%-plus holds. FanDuel’s status as market leader means parlay wagering will continue at a notable clip, which means win rates will likely stay high.

Overall, Ohio performed largely to expectations in finding its spot in the national rankings for sports betting statistics. The challenge is building on those numbers and avoiding a sophomore slump.

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