The month in US sports betting - Missouri debates sports betting legislation

The regulated US sports betting market generated handle of $1.45bn for the month of October, which was up 8.35% on September’s total of $1.34bn.

The significant month-on-month increase was attributable to the popularity of NFL and NCAA football and the commencement of the NBA and NHL regular seasons. Indiana, New Jersey and Pennsylvania – driven by their online sports betting verticals – also achieved strong month-on-month growth and posted record wagering volumes.

In October, as in previous months, Nevada and New Jersey accounted for the lion’s share – or about 70% – of total regulated US sports betting handle. Of note, Indiana – which is only in its second full month of operations – accounted for approximately 7% of total regulated handle in October, making it the largest market behind Nevada, New Jersey and Pennsylvania.

We expect the US market as a whole to grow meaningfully in November, driven chiefly by increases in online sports betting volumes in Indiana, Iowa, Pennsylvania and Rhode Island.

Eilers & Krejcik Gaming

Add sports betting, get stuff

Every quarter, we’re learning more (and more) about interplay between sports betting and traditional casino gaming.
A consistent theme – and one we’ve heard echoed on third quarter earnings conference calls – has been that sports betting is driving new visitation to casino premises which is subsequently cross-selling to table games.

On Penn National’s most recent earnings call, CEO Tim Wilmott said that company “properties that have been live with retail sportsbooks in the past 15 months have experienced an average of 15% year-over-year growth in table game revenue post-launch.” That boost is consistent with what we’re hearing from our channel checks on the land-based gaming side.

Of note, Wilmott went on to say: “In fact, most of the table games and food and beverage growth at these properties has been driven by visitation and spend from new and reactivated guests to our properties.”

Other takeaways so far regarding the relationship between sports betting and casino gaming: 1) sports betting is generally increasing food and beverage (F&B) sales and marquee sporting events (e.g, March Madness) tend to drive F&B sales spikes; and 2) sports betting is not driving material increases in hotel stays (some sources we’ve polled have observed that sports bettors are largely day trippers).

Rhode Island – registration rethink?

A recent news report out of Rhode Island, where in-person registration is required for online sports betting, could prove instructional for other states that consider implementing such registration.

Indeed, according to that report, of the 12,000 or so local bettors that have begun the account registration process on their mobile devices, only around 45% of those bettors have completed that process at a Rhode Island casino.

On the face of it, that doesn’t seem odd to us; after all, we assume that there would be some amount of lag time between the commencement of the account registration process and the completion of that process.

But the obvious takeaway here for state – and for the industry at large – is that Rhode Island casinos are capturing less than half of potential demand and likely ceding some of that uncaptured demand to illegal market operators who neither pay taxes in nor provide any tangible benefits to Rhode Island.

Speaking of missteps …

… we’ve said in recent reports that the Oregon Lottery’s newly launched online sports betting app, Scoreboard, is likely to materially underperform given the lottery’s decision – for now – to ban betting on collegiate events.

Unfortunately, the bad news for Oregon bettors doesn’t end there, as the state is currently withholding 8% for state taxes from winning tickets over $1,500 and an additional 24% for federal tax for winning tickets over $5,000. The effective impact of such a policy is simple: Bettors’ bankrolls are artificially deflated and so, too, are overall wagering volumes.

Put all of this together, and you’ve got the makings of a market where policy could – and very likely will – meaningfully depress consumer participation in regulated sports betting.

Make it 20

By a slim 50.7% majority, Colorado voters approved sports betting within the state on November 5, clearing the way for the state’s Limited Gaming Control Commission to regulate sports betting at the state’s 33 commercial casinos and online. Colorado is the 20th US jurisdiction to allow sports betting.

Next, the Control Commission is soliciting interested stakeholders to apply for its sports betting working groups. The groups will help the Commission to develop rules, regulations and implementation plans.

Although the law does not officially take effect until May 1, 2020, the Commission is empowered to establish temporary rules and accept license applications prior to this date. With the aid of the working groups, the state could see launch as early as Q2 2020.

Light touch taxation?

In late October, we traveled to Jefferson City, Missouri, to provide testimony to the House Interim Special Committee on Gaming. The committee is researching sports betting and is set to deliver a report on its findings to the legislature at the end of the year.

Our top-line takeaway from the hearing was that the committee appeared to be leaning toward legislation that would be aggressively industry friendly. In fact, during one exchange between us and Representative Dan Shaul, the committee’s chairman, Shaul remarked that Missouri may seek to tax sports betting revenue at 6% – a decision that would make the midwestern state the lowest-tax, regulated sports betting jurisdiction in the country.

The 2020 Missouri legislative session kicks off on January 8. Watch this space.