Despite only being live for half of November, Hollywood Casino at Penn National fared decently in its sports betting debut, with the land-based book generating $1,414,587 in handle.
Hollywood was the first casino to open a book, followed just last week by temporary sportsbook launches at Rush Street properties SugarHouse Casino in Philadelphia and Rivers Casino in Pittsburgh. By extension, it was the only casino with something to report by way of sports wagering revenue for the month of November.
Don’t let the “gross” numbers fool you?
In its first two weeks, Hollywood generated $508,997 in gross wagering revenue, which on paper equates to a hold of 36% in an industry where something along the lines of 5 – 7% is the norm.
Don’t worry folks, Pennsylvania bettors aren’t that bad. Instead it comes down to the way gross revenue is calculated. Per the revenue report:
“Sports Wagering Gross Revenue reflects the Handle (wagers) less ONLY the payouts on winning wagers made DURING the reporting month. This means the Handle includes wagers received for future events in which the payout would not be made on a winning ticket until a future month. Therefore, a relevant win percentage cannot be calculated by simply dividing the Gross Revenue by the Handle reported during a like period.”
November probably proved even more of an anomaly than what we’ll see down the road, as it was the first time players had the opportunity to place futures bets, which are generally favored among new bettors:
It actually points to a severe gap in the education of bettors on how sports betting works. They were largely betting Futures it would appear. When presented with a confusing array of sports betting options, the neophyte sports bettor always chooses Futures.
— Captain Jack Andrews (@capjack2000) December 18, 2018
Pennsylvania imposes an onerous 34% tax rate on sports betting revenue, and an additional 2% local share tax. In November, state coffers took in a total of $183k, which is probably more than Hollywood Casino will have actually made once future and unclaimed tickets are cashed.
For comparison’s sake
Although it’s way too early to make any long-term predictions, we look to the early performance of the New Jersey sports betting industry as a sort of measuring stick.
Over the first two weeks of NJ sports wagering in late June, the industry saw $16.4 million in handle. However, that was spread out across three books, two debuting on June 14 (Borgata and Monmouth Park), and a William Hill branded book opening at Ocean Resort Casino on June 28.
Turning to revenue, Monmouth Park took in $2.28 million in revenue during its first two weeks; a figure which was inflated by the speeding hype train surrounding the launch, as the book became the first in the U.S. outside Nevada. Borgata put forth a more pedestrian performance, generating $987k in revenue.
Admittedly, given these figures, a $509k mark over a similar time frame and under similar conditions doesn’t seem that great. But the book’s earliest testing days were hampered by a snowstorm, and the Hollywood Casino book launch didn’t have the same fanfare surrounding it as the NJ books did. Couple this with the fact that Hollywood Casino is not really located in a major population center (the nearby city of Harrisburg only has a population of ~50k), and any comparison to NJ should be done with a hefty grain of salt.
Record breaker for fantasy
For November, the fantasy sports industry generated $3,241,161, up from October’s former high water mark of $2,902,863. As usual, DFS giants DraftKings and FanDuel led the charge, accounting for 54% ($1.75 mm) and 44% ($1.42 mm) market share, respectively.
Given this, and assuming that the actual revenue Penn National will see is in the $100k range, sports betting revenue has a ways to go before it catches up to fantasy. But it will.
In New Jersey, sports betting has consistently generated eight-figure revenue, coming in at $21.2 mm ($330.7 mm in handle) for November. Although Pennsylvania will prove more of a capped market, as operators are limited to one online skin apiece, it’s also a larger state, with a population approaching 13 million.
Even by the end of December, it’s plausible that sports betting will overtake fantasy, as Penn National will have operated its book for the entire month, and we’ll have partial month reporting from books located in the major population hubs of Pittsburgh and Philadelphia. All bets will be off when the first online sportsbooks launch, expected in Q1 2019.