US Sports Betting Update – Ohio Governor Signs Sports Betting Bill into Law
Ohio can usher in a new era of legal sports wagering in 2022 after Gov. Mike DeWine signed HB 29 into law this week. The bill paves the way for 25 different online sportsbooks to launch in the Buckeye State. Master licenses will be awarded to pro sports teams, casinos and racinos, who can then tie up market access deals with online sportsbooks such as FanDuel, DraftKings and BetMGM.
HB 29 passed through both chambers last week and landed on Gov. DeWine’s desk. He wasted little time in signing it into law, as he is a staunch proponent of legal sports betting. The legal industry will begin no later than January 1, 2023, but it could arrive sooner than that.
Ohio is the seventh largest state by population and GDP, and it has six major professional sports teams: the Cleveland Browns, Cincinnati Bengals, Cleveland Cavaliers, Cleveland Indians, Cincinnati Reds, and the Columbus Blue Jackets. There are also two MLS teams in the state – Columbus Crew and FC Cincinnati – along with several leading college teams. Ohio is therefore expected to have one of the country’s largest sports wagering industries. It is a little smaller than Pennsylvania and Illinois by population and GDP, and they are currently the third and fourth largest sports betting industries in the United States.
A $12 Billion Industry
Analysts estimate that the annual sports betting handle in Ohio could reach $12 million when it is fully mature, yielding $1 billion in annual gross gaming revenue. The bill imposes a 10% revenue tax, so the state is hoping to receive a financial boost of around $100 million per year from the industry. Lawmakers are keen to get the industry up and running as quickly as possible.
Casinos and sports teams must also pay a $2.5 million fee for a master license. Each licensee will be able to host one online skin. They can add a second online skin at a later date if that online sportsbook proves it can bring incremental revenue to Ohio’s sports betting industry. Fees for retail sportsbooks will initially range from $90,000 to $140,000. Ohio’s eight pro sports teams, four casinos and 11 racinos are expected to apply for licenses.
It will be one of the country’s most open and competitive industries, with a reasonable tax rate, so it is expected to be dynamic. Betting on esports will also be permitted – something that is not widely available across the country – but lawmakers rejected a plan to add fixed-odds horse racing betting onto the bill.
Pennsylvania Smashes Revenue Record
Lawmakers in Ohio can look to their eastern neighbor to see the vast potential that sports wagering offers. Pennsylvania earned a record-breaking $84.9 million in sports betting revenue in November, shattering the previous record of $49.3 million set in January. Keystone State sportsbooks handled $761.6 million last month, which was 2% short of the record $776.3 million set in October. However, it was a tough month for sports bettors, allowing sportsbooks to hold 11.1% of the wagers taken.
That ensured Pennsylvania easily broke its previous record in terms of gross revenue. Operators are allowed to deduct promotion costs before paying taxes. They handed out $21.3 million in promo credits during November, bringing taxable revenue down to $63.6 million. The state charges a very high 36% tax, so it raked in almost $23 million for November, which is a new record.
FanDuel maintained its lead over DraftKings as the number one sportsbook in Pennsylvania, with a 31.8% share of the handle and a 44% share of revenue. FanDuel has held a far higher percentage of bets taken than its rivals across the country over the past couple of months. FanDuel earned $37.5 million in revenue, DraftKings accounted for $16 million, Barstool made $8.3 million, BetMGM was fourth with $5.7 million, BetRivers earned $4.1 million and Parx was sixth with $3.7 million, according to the report from the Pennsylvania Gaming Control Board.
New Jersey Also Breaks Revenue Record
New Jersey became the first state to eclipse $100 million in monthly sports wagering revenue during November. Sportsbooks in the Garden State handled $1.26 billion worth of bets during the month. That was slightly lower than the record $1.3 billion handle achieved in October, when a calendar quirk led to five full weekends of NFL action. However, it was a more profitable month for the sportsbooks, as they held $114.8 million in revenue.
That easily broke the previous record of $84.2 million set in October. The state earned $17.3 million in tax revenue. It also ensured New Jersey maintained its status as the largest state for sports betting by a comfortable margin. It could change when neighboring New York soon rolls out its own legal sports betting sector, as that could put an end to the trend of New Yorkers heading into New Jersey to place legal wagers. For now, New Jersey is comfortably ahead of Nevada, Pennsylvania and Illinois as the market leader in the country.
FanDuel also maintained its lead in New Jersey during November. The Meadowlands master license, which hosts FanDuel, PointsBet and SuperBook, put up $59 million in gross revenue, which was more than half the total for the state. FanDuel accounts for the bulk of that figure. Resorts, which hosts DraftKings alongside its own Resorts Sportsbook, came second with $22 million, followed by Borgata, which hosts BetMGM.
Total gambling revenue in New Jersey for 2021 now stands at $4.33 billion, which represents an increase of 68.7% on the performance in 2020. Figures from the New Jersey Division of Gaming Enforcement, show that casinos, racetracks, and their partners reported $439.6 million in total revenue for November, compared to $288.9 million in November 2020, reflecting a 52.2% increase. It is interesting to note that sports betting now accounts for more than a quarter of the total revenue. Land-based casinos brought in $206.9 million in November, and online casinos earned $118 million.