New Jersey seized Nevada’s crown and emerged as the largest revenue generating state in the US for sports betting operators in January. The Garden State won revenue of $18.8 million from $385 million in sports bets placed during January as its nascent industry continued to gather pace. Nevada has now released its figures for the month and, despite taking a record $497 million in sports wagers, it held just $14.6 million of that total. It was the first time that Nevada has ever failed to be the top revenue-generating state in the country when it comes to sports betting.
Nevada sportsbooks actually enjoyed their busiest ever January, with handle up almost 19% on the previous year, but bettors had a strong month. It resulted in a hold rate of just 2.9% in the Silver State, down from the average of 4.8%. Over in New Jersey, the hold rate was 4.9% in January, as bettors did not fare quite so well.
However, Nevada could well regain its status as top dog when February’s figures are unveiled. The Super Bowl took place on February 3 and Nevada suffered its biggest handle drop on the game, falling from $158 million in 2018 to just $146 million this year. However, its sportsbooks won £10.7 million on the Super Bowl as bettors in the state placed too much faith in the LA Rams. Meanwhile, New Jersey books recorded a total loss of $4.6 million on a handle of $34.9 million.
It would not be surprising to see Nevada earn higher revenue in February, but it is interesting to see New Jersey already nipping at its heels when it comes to handle. Nevada’s industry is well established, whereas New Jersey’s is less than a year old and proving to be extremely dynamic. Eilers & Krejcik Gaming predicts New Jersey’s revenues from sports betting will eclipse Nevada’s by 2021. Its population is more around five times larger and it remains a significant tourist destination in its own right.
Paddy Power Betfair Pleased with US Flutter
The early winners in the fledgling New Jersey sports betting market are DraftKings and FanDuel. Eilers & Krejcik estimate that DraftKings, the first sportsbook to launch in the state, captured a 44% market share in January, with FanDuel at 37%, William Hill achieving 12%, SugarHouse earning 4% and all the rest taking just 3% between them. DraftKings has just tied up a partnership agreement with Caesars to boost its footprint across the country, while FanDuel is owned by UK gambling giant Paddy Power Betfair, benefiting from its commercial might and industry expertise.
Paddy Power Betfair is poised to change its name to Flutter Entertainment and it claims to be pleased with the gamble it took on FanDuel. The firm has just delivered its 2018 financial results, revealing that revenues grew 9% to £1.9 billion ($2.5 billion). However, profit before tax was £219 million in the year ending December 31, down 11% on £247 million it made in 2017. The launch of US sports betting resulted in a significant loss for the company.
It lost £15 million ($19.8 million) on its US operations in 2018. The daily fantasy sports business – FanDuel’s primary focus before Paddy Power Betfair pushed it into sports betting – was in profit, as was its US casino business, but FanDuel Sportsbook incurred a loss of £24 million ($31.6 million). Yet chief executive Peter Jackson attributed that to “promotional and marketing spend in acquiring new customers”, and reiterated his firm’s commitment to the US sports betting industry.
“The opening of the US online sports betting market has the potential to be the most significant development to occur within the sector since the advent of online betting,” he said. He also took a pot shot at rivals William Hill, Bet365 and Ladbrokes Coral owner GVC when he added: “Rather than announcing our plans, we have moved quickly to give ourselves the best chance to win in that market. We are confident that FanDuel’s nationally recognised sports brand, 8 million customers, our group betting expertise, and our market access partnerships position us very well. Our success to date supports this view, with FanDuel achieving a 35 percent online market share in New Jersey in its first five months of operation, and Meadowlands becoming a marquee venue for sports betting.”
Paddy Power Betfair reported that its total handle on US sports bets hit $557 million in 2018. However, investing in new customer acquisition is crucial in this burgeoning industry and Jackson warned it will not be profitable for 18 to 30 months post-launch. “Overall sportsbook contribution: quantum of investment losses will depend on the level of market growth in New Jersey; FanDuel’s performance in New Jersey; and the timing of regulation/launch in additional states,” he said. “Contribution from newly launched online states will remain negative while the proportion of newly acquired customers remains high, due to high levels of promotional and marketing spend in acquiring customers.”
Can South Dakota Bill be Brought Back from the Dead?
New Jersey, Pennsylvania, Delaware, Rhode Island, Mississippi and West Virginia have all introduced legal sports betting since PASPA was struck down 10 months ago. Several states are bidding to join the party in 2019, and South Dakota was a frontrunner, but it suffered a major setback this week. On Monday, a House panel rejected a measure that would ask voters to legalize sportsbooks in Deadwood. However, Rep. Tim Johns of Deadwood resurrected the bill – which had previously passed the Senate – via a rare manoeuvre on the House floor known as “smoking it out”.
The full House will now vote on Wednesday to decide whether to calendar the measure. If that passes then the House will vote on the bill itself. “The House voted to Smoke Out our bill and we have a lot of appreciation for Tim Johns for moving that forward,” said Mike Rodman, of the Deadwood Gaming Association. “Deadwood has always had to fight for what it wants and this is no different. We think this is a fight worth having and we’re going to continue to try to move it forward.” Legislative action also continues in Iowa, Maryland, Minnesota, Missouri and New Hampshire, so we should expect plenty more developments in the weeks and months ahead.
Author: Kristian
Kristian heads up the content and SEO team at Digital Fuel having worked in digital marketing for ten years. He's as passionate about creative content as he is about Brighton & Hove Albion FC and when he's not following football he's writing about Brighton's bustling pub scene.