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Ohio regulators announced Tuesday (February 28) that the state has shattered the all-time U.S. record for gross revenue in its first month of sports betting, aided by a stunning promotional blitz by the market leaders.
The Ohio Casino Control Commission (OCCC) reported that its licensed sports-betting operators collected just under $209m in gross revenue in January, the highest monthly gross revenue figure ever earned by a state from sports betting, according to VIXIO GamblingCompliance research.
However, that top-line revenue figure was buoyed by more than $319m in promotional credits being spent to capture customers in the highly competitive market, which launched on January 1 and saw 16 operators accept wagers throughout the month.
More than half of that promotional spending came from industry market leader FanDuel, which spent more than $166m in an effort to add another state to its market-share dominance.
As a result, the Flutter-owned company brought in $103m, good for about half of the market share in the state by gross revenue, from $494m in handle, or about 45 percent of the state’s $1.09bn in opening month volume.
Another massive promotional spender was rival DraftKings, which spent $86.6m to bring in about $55m in revenue and earn a clear second place position on the market-share leaderboard.
Although the heavy promotional spending lead to Ohio blowing away the U.S. monthly gross revenue record, it came at a steep cost for operators, with the FanDuel- and DraftKings-led promotional spending leading to operators taking more than a $110m net revenue loss in the state’s first month.
Other eight figure promotional spenders included BetMGM offering more than $27m in credits and bet365 storming into the Buckeye State market with almost $16m in bonus offers and promotions.
Promotional credits cannot be deducted from taxable revenues until 2027 in Ohio, so one of the few entities that actually made any money in the record month was the state of Ohio itself, bringing in more than $20m in tax revenue for the month.
The state taxes sports-betting revenue at 10 percent.
Of the 16 operators, only Caesars and Betr saw their revenue slightly outweigh their promotional spending, with Caesars bringing in about $400,000 in net revenue and Betr recording just over $10,000.
Despite vows from leading sportsbook operators to curb marketing spend in pursuit of profitability in 2023, Ohio offers further evidence that operators will not be shy about attacking new markets with promotional credits.
Operators have deducted more than $166m in promotional credits from taxable revenues in Maryland since the state’s mobile betting launch in late November, and a similar blitz likely awaits in Massachusetts as its scheduled launch approaches on March 10.
Still, the prevalence of advertising and promotions in Ohio has already attracted unfavorable attention.
In addition to several sanctions issued by the OCCC for marketing violations, Republican Governor Mike DeWine earlier this month proposed doubling the state’s sports-betting tax rate from 10 percent of gross revenues to 20 percent in his executive budget.
DeWine also proposes empowering the OCCC to deny the ability for operators to offer promotional credits as a sanction for violating the state's rules on promoting bets as being “risk-free” if players are required to risk their own money to use the offer.
