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State of the Union: US Sports Betting Update – Pennsylvania Sports Betting Industry Gathers Steam

Parx Casino made a superb start to life in the sports betting industry as it took revenue of $1.2 million off a handle of $5.4 million in January. The sportsbook only opened in the middle of the month, but it outperformed all of its competitors and suggested it has a bright future ahead of it. In total, the Pennsylvania sports betting handle hit $32 million in January, its second month of trading after it rolled out legal sportsbooks. That paled in comparison to the $385 million wagered on sports in neighbouring New Jersey during that month, but the Keystone State’s industry is only just finding its feet.

It now has six land-based sportsbooks, although only three – SugarHouse, Hollywood and Hollywood – were trading for the entire month. Harrah’s Philadelphia was launched in mid-January, followed by two books owned by Greenwood Gaming – one at Parx Casino in Bensalem, just outside Philadelphia; and the other at its South Philly Turf Club, close to stadium district where the Eagles, the 76ers, the Phillies and the Flyers play their home games.

Mobile Wagering Needed to Challenge New Jersey

SugarHouse casino in Philadelphia led the charge in January as it took a handle of $10.8 million. However, the punters were a lot savvier there as it made revenue of just $100,000 from those wagers. Bettors visiting the new sportsbook at Parx did not fare so well as the casino kept a massive hold of more than 20%. SugarHouse’s sister property, Rivers in Pittsburgh, took a handle of $9.5 million and a gross revenue of $850,000. Hollywood, the first sportsbook to launch in the state, took a handle of $4.8 million and revenue of $285,000. Harrah’s and the South Philly Turf Club each took less than $1 million in wagers and both kept modest revenues.

Sports betting is a more mature industry in New Jersey, but only one of its retail sportsbooks – the FanDuel book at the Meadowlands near New York City – took a higher revenue than Parx in January. When you consider that Parx was only open for half the month, it should leave its owners feeling optimistic about the future. However, the figures show that Pennsylvania is clearly hamstrung by a lack of online and mobile sports wagering. In New Jersey, digital revenue hit $14.7 million in January, compared to $6.2 million in retail revenue. Operators are currently fine-tuning their online sportsbooks, but launch dates for each have not yet been determined.

January is a quiet time in the US sporting calendar, so it is unsurprising to see month-on-month revenue dips at SugarHouse, Rivers and Hollywood. It will be interesting to see how Pennsylvania fares in comparison to New Jersey when the new NFL season begins in September. By that time, its land-based books should have achieved a degree of maturity and mobile wagering should have been rolled out. Yet Pennsylvania is also lumbered with huge taxes and license fees: its operators must pay $10 million for a sports betting licence and 36% tax on revenue, while in New Jersey the revenue tax is just 8.5% in retail and 13% for digital and the initial fee is paltry by comparison.

Critics have argued that these eye-watering fees will hold Pennsylvania back. Yet the legislators refused to back down, the casinos relented and there are already six sportsbooks up and running across the state, with more slated to launch in the near future. “For these casinos, competition is everything,” said State Representative Rob Matzie, the sponsor of the sports wagering bill that was incorporated into state law, back in July 2018. “If the Sands in Allentown decides to do it, or the Rivers in Pittsburgh, or the SugarHouse in Philadelphia, then all of a sudden everyone will fall in line, and they’ll all want to be part of that.”

Illinois Hoping for a Piece of the Action

His prediction proved to be remarkably prescient as everyone else decided to pile in after Hollywood and SugarHouse took the plunge. Now J.B. Pritzker, the incoming governor of Illinois, wants to adopt a similar stance in the Prairie State. He has projected that sports wagering will bring in a massive $217 million in 2020, based largely on his aspirations of issuing 20 sports betting licences at $10 million apiece, an identical fee to that charged in Pennsylvania. He is also demanding a 20% revenue tax, which would be the second highest in the country after Pennsylvania.

“I am calling on the legislature to take this up immediately so that Illinois can realize hundreds of millions of dollars, create new jobs, and bring sports betting into a regulated environment that will protect citizens from bad actor,” he said. “If we do it this year and become the first state in the Midwest to move on this initiative, we can realize more than $200 million from sports betting fees and taxes in FY 2020.”

Illinois has an almost identical population and GDP to Pennsylvania, as they are the fifth and sixth biggest US states in each regard. “Based on estimates from Oxford Economics, Illinois could generate between $384 million and $680 million in gross sports wagering revenues per year under full implementation,” said Pritzker. “At the proposed 20% rate, this would generate tax revenues of between $77 million and $136 million per year.”

The proposals would allow for in-person and mobile wagering for anyone in Illinois, and in the first five years operators could benefit from tax deductions that offset the high revenue tax demands. Another state of similar size and economic might, Ohio, could also roll out sports betting soon. “If we think sports betting can be a healthy endeavour that we can enhance, maybe we should look at legalizing it and putting it in a safe and secure environment,” said State Representative Bill Coley this week. If Illinois and Ohio join Pennsylvania and New Jersey in offering regulated sports betting, it would mean that four of the eight largest states in the US are on board.

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.

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