The January addition of Ohio to the regulated US sports betting industry has made an immediate impact on the overall revenue figures.
With barely 120 days of data under our belt, it is too early to draw firm conclusions about the state of OH sports betting. But let us see what we can glean from the early reporting.
Hot start for Ohio sports betting
Looking at the raw performance provides some baseline insight into the size of the OH sports betting market. Here are the running totals through the end of April:
- Handle: $3.02 billion
- Revenue: $451 million
- Taxes: $45.2 million
The first month was especially impressive on its own.
Ohio shot out of the gate with a billion-dollar debut, prompting analysts to reconsider their forecasts for the calendar year. Even the most optimistic outlooks did not predict such a rocket-fast start. New York is the only other market that managed to open with a ten-figure month.
How it happened in Buckeye State
Fueled by promotional credits aimed at acquiring new customers, Ohio’s January output was the second largest in the country, bigger than New Jersey, Illinois, and Nevada. The next three months saw Ohio drop back into the pack a bit, however, ending April in fifth place on the national leaderboard for 2023.
The per-capita numbers help put that activity into context.
Ohioans wagered an average of $255 each over the first four months of the year, making it a top-ten market in the country by that yardstick. Its early performance puts it well ahead of some of the large, more mature states like Pennsylvania, Indiana, and Virginia.
Directional OH trends more moderate
Lessons learned from other recent launches suggest that customer acquisition in a given market will peak much quicker than it has in years past. Operators’ generosity with promos around launch is drawing new bettors into the fold at a pace to which models are still trying to adjust.
That trend seems to be continuing in Ohio, as recent months retrospectively reveal a mild case of overindexing at launch.
The surge of new bettors in January was already showing signs of abating by February; Ohio’s production dropped some 43% in its second month. Nearly every market pulled back in February because of its shortness and the sparseness of the sports calendar, but Ohio’s decline was much more severe than the national dip of 20%.
First Ohio sports betting growth spurt finished?
That seemed to mark the end of a quick initial growth spurt, as it fell back into line with the rest of states. It was slightly off the pace once again in March (Ohio +15%, nationwide +20%) and April (Ohio -29%, national -20%.) That does not mean Ohio is taking a step backward. This ‘decline’ relative to the field is just a symptom of that early overindexing.
Given the numbers so far, Ohio appears to be on course for $8 billion in handle for its first full year of operation. That should yield around $600 million in revenue, putting it in a battle for fifth place on the US leaderboard, maybe a position or two higher than expected before launch, but not as high as January led us to believe.
At this point, it looks like Ohio’s first month of legal sports betting might remain its largest month for some time to come. Another wave of customer signups heading into the start of the upcoming NFL betting season could further reshape that outlook.
Battle for market share taking shape
The way in which market-share dynamics develop is always interesting to follow during the post-launch phase. Ohio is no exception there either.
Also no exception? FanDuel and DraftKings are way out in front of the field. The national leaders have seized early control of Ohio sports betting, combining to account for more than 70% of the total output so far.
FanDuel is the clear number one, and its lead over DraftKings depends on how you measure. The former is responsible for 39% of the state’s handle and 46% of its total revenue to date.
Which other sportsbooks are competing in Ohio?
That dueling dominance does not leave much of the pie for the others to scavenge.
Number three nationally, BetMGM has so far failed to make a bigger impact in Ohio. It is third there too, but its 7.5% share of handle trails the leaders. That number is not moving either, tracking within a few hundredths of a percent across each of the first four months.
Analysts continue to keep a mindful eye on bet365 too. Ohio seems to be a point of focus for the big international bookmaker, moving itself into fourth place on the back of an aggressive promotional push. It is actually challenging for a spot on the podium, nipping right at the heels of BetMGM.
Caesars and Barstool meanwhile battle for fifth place at around 5% apiece. Beyond the top five, Hard Rock, Tipico, and BetJack are the only other brands that have carved out at least 1% of the Ohio sports betting market for themselves so far. That leaves some large national brands like PointsBet and BetRivers without a significant foothold in the state.
Ohio Lottery losing on sports betting
The portion of the Ohio sports betting market overseen by the lottery is not performing especially well.
There are more than 900 kiosk betting locations scattered across the state, with five operators currently offering a sports lottery product. These Class C operators have so far combined to generate $4.34 million in handle and $479,000 in revenue, or barely a tenth of one percent of statewide totals.
Those numbers suggest that kiosks are not a particularly popular way to bet on sports in Ohio. In fact, it is not even apparent that kiosk sports betting will be a sustainable business in the state.
The Ohio Lottery says it costs $650,000 per year to administer the Class C sports betting product, and it has a long way to go to become profitable. The share of kiosk revenue retained by the state amounted to just $105,000 through the first four months.
A Lotto investment for what return?
It should be said that it is not unheard of for a lottery sports betting operation to lose money in early days, as upfront costs can be significant. Just ask officials in Oregon or Washington DC.
It is also worth noting that kiosks are subject to additional restrictions in Ohio that sportsbooks and betting apps are not. The menu is slimmed down to straight pregame markets and parlays with no more than four legs. Individual patrons are limited to $700 in total weekly wagers.
In broader context, however, the prevalence of online sports betting apps in Ohio simply means that few consumers are actively seeking out these dedicated kiosk locations.
Promo credits tell rest of the story
No analysis of Ohio sports betting is complete without a discussion about promotional spending.
Online operators have so far combined to award customers some $448 million in promotional credits, a few million more than the total revenue produced.
At least 15% of the total betting handle to date has been fueled by the operators’ own money.
Who is handing out bonus offers in Ohio sports betting?
Unsurprisingly, FanDuel and DraftKings top the promos column too.
FanDuel has given away more than $200 million to its new customers in Ohio, leaving just $3 million in pre-tax revenue. DraftKings has meanwhile given away almost $120 million, retaining a similar 2% of its overall gross revenue.
While those two are eking out a small profit on the top line, a few brands are still digging out of the hole.
Give me a hand, would you?
Tipico and Betr have each given away about twice as much money as they have earned so far, while bet365, BetRivers, and betParx are all around the 150% mark. Young MVGBet meanwhile doled out almost $250,000 in promotional credits while also losing $7,500 in bets to customers.
With operators giving all of their early earnings back to customers, Ohio’s decision to tax the proceeds derived from promotional credits is the only reason the state has collected any revenue from online sports betting at all.