Competition among sportsbooks benefits bettors by enabling line-shopping for the odds most to their liking, but Pennsylvania’s February data also points to how they can provide those gamblers more promotional credits.
The dozen online sportsbooks in the state gave out a record $16.6 million in credits in February, up from the prior high of $15.3 million in January, according to Pennsylvania Gaming Control Board data.
In proportion to online handle, the promotions to customers were even better by monthly comparison, representing 3.6% of last month’s $469.7 million wagered. Credits in January represented 2.6% of that month’s record $579.9 million online handle. The prior high for credits as a proportion of handle was the $5.5 million bettors received in July when wagering $155.4 million, for 3.5%.
The table below shows how monthly promotional credits have risen for Pennsylvania online sportsbooks since July.
|Month||Online sports betting handle||Promotional credits|
|February||$469.7 million||$16.8 million|
|January||$579.9 million||$15.3 million|
|December||$535.2 million||$11.3 million|
|November||$447.4 million||$11.2 million|
|October||$472.3 million||$11.1 million|
|September||$414.1 million||$12 million|
|August||$321.6 million||$9.3 million|
|July||$155.4 milion||$5.5 million|
New sites tend to be the most generous
February is a natural time for operators to offer incentives to customers due to the Super Bowl being played in that month. Many casual bettors are looking at sites more than normal, as reflected by the $53.6 million wagered in Pennsylvania on the game. If a sportsbook can capture their action with an enticement during the Super Bowl, players may be more likely to return for future business instead of visiting a competitor.
But another big factor is how much money the newer operators tend to give away compared to long-established sites. Most online sportsbooks provide welcome offers such as deposit matches or risk-free bets to attract and reward new customers.
So in the month of February, the three operators proportionally returning the most to bettors in promotional credits were the three newest ones in Pennsylvania.
Betfred, which launched in December through partnership with Wind Creek Bethlehem, gave away credits in February matching 12.7% of handle volume — $217,419 on total wagers of $1.71 million.
Barstool Sportsbook, the Penn National Gaming site that started in September, gave away the equivalent of 8.9% — $5.8 million on handle of $65.6 million.
And BetMGM, which launched in December using a skin made available from Penn National through one of its mini-casinos, was at 5.4% — or $1.8 million in credits with $33.7 million in handle.
In the case of Betfred and Barstool, their credits were so extensive that they both reported net revenue losses for the month. That’s how important the jockeying to attract new customers can be.
FanDuel giving away $3 million-plus a month
While the sportsbooks sacrifice some profit by giving credits away, that loss is offset somewhat by the fact that they don’t pay tax on the amount of revenue they give up from such promotions. Pennsylvania’s tax of 36% on sports wagering is far higher than is common nationally.
What is defined as untaxed promotional play is curiously somewhat vague in the state. State law refers to it as “cash or cash equivalents paid to players as a result of sports wagering,” according to gaming board spokesman Doug Harbach.
“It is up to the operators to determine what falls under this definition and the Department of Revenue, which has authority over taxation issues,” he said.
Not surprisingly, the most promotional credits overall are claimed by the state’s highest-volume betting site, FanDuel. It has reported more than $3 million in credits each month since the return of major sports activity in July, including $6.3 million in January and $5.4 million in February.
As a proportion of handle, its $36.2 million in credits since July is the same 2.7% as has been the state average.
Proportionally, Betfred shows up as the biggest provider of credits since starting, with $440,758 in credits equivalent to 13.5% of its handle in three months. Among sites that have been around longer, Unibet gives away the most, with $6.78 million in credits since July equating to 11.4% of its handle.
DraftKings has been tightening up
But FanDuel’s biggest competitor, DraftKings, has shown a different approach with some sharp dips in credits awarded in certain months recently. Its $16.8 million in credits since July represents an average of more than $2 million monthly, but the volume was just $1.7 million in November, $1.5 million in December, and $1.6 million in February.
The latter number ran counter to the higher trend for last month statewide, and it came after a spike to $2.9 million in credits awarded by DraftKings in January. Overall since July, its credits of $16.8 million have equated to 2% of its $859.6 million in handle for those months, which is less than that the statewide average of 2.7%.
In a Feb. 26 earnings call with the investment community, DraftKings CEO Jason Robins acknowledged that the company’s promotional spending nationally in the fourth quarter of 2020 was generally less than in the July-September third quarter, when there was heavy competition to acquire new customers during the return of major sports.
DraftKings may also be focusing more on other newer states, considering it has been operating in Pennsylvania for more than a year, and those other states have lower tax rates. Robins noted the difference between promotional spending for new customers versus existing ones.
“We do do promotions for existing customers, but they’re far more aggressive with new customers,” he said. “And simply, if we didn’t change a thing, you’d see a significant decline as the business matures.”
Regardless of DraftKings’ variance, the state’s numbers show Pennsylvania bettors are finding plenty of opportunity for promotions that help offset the sportsbooks’ advantage from their customary 10% vig. Numbers for March to be released in about two weeks will indicate if the trend continued upward, or if bettors benefited particularly in February from a Super Bowl bump.