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State of the Union: US Sports Betting Update – The Mighty FanDuel Seizes Control of Pennsylvania

The sports betting handle in Pennsylvania surged past the $100 million barrier for the first time in August following the expansion of its online market. It is usually one of the quietest months of the year due to a dearth of action for American sports fans to wager on. But Pennsylvania’s strong performance suggests that it can flourish in September thanks to the beginning of the new NFL season.

There are millions of passionate Philadelphia Eagles and Pittsburgh Steelers fans in the state and they can finally bet on their teams online without having to turn to illegal offshore sites.

FanDuel has only just launched in Pennsylvania, but it has already become the market leader. In total, the Keystone State brought in a handle of $109 million and operators made a revenue of $9.9 million. FanDuel, which launched on the licence of Valley Forge Casino towards the end of July, accounted for $37.8 million of the handle and $3.1 million of the revenue. That knocked SugarHouse into second place, followed by Rivers and then Parx.

Primed for Domination

It is unsurprising to see FanDuel quickly emerge as the dominant player in the state. It did not take long for the brand to overhaul rival DraftKings and become the clear market leader in neighbouring New Jersey, which is now the number one sports betting state in the U.S. The sports betting handle in the Garden State reached $297.3 million in August and generated revenue of $25 million. FanDuel accounted for $9 million of that revenue, leaving it comfortably ahead of DraftKings and William Hill.

The FanDuel brand was already popular across the U.S. before states began to legalize sports wagering last year in the wake of PASPA being struck down. In the absence of legal sports betting, Daily Fantasy Sports – a watered-down form of wagering – was hugely popular and FanDuel invested heavily in high-profile marketing in an effort to usurp rival DraftKings. Betting giant Paddy Power Betfair recognised the potential of the brand and purchased it last year before using the FanDuel name to front its sports betting operations Stateside.

A Winning Formula

Paddy Power Betfair has now rebranded as Flutter Entertainment, and FanDuel is a large and growing part of the business. Combining the FanDuel brand with the operational expertise of the Paddy Power team in the growing sports betting vertical has proved to be a winning formula for the business. It is absolutely dominant in New Jersey, and it is likely to tighten its grip on Pennsylvania in the months ahead.

SugarHouse and Rivers are both owned by the same firm, Rush Street Gaming, and if you combine their handle it makes RSG the top operator in Pennsylvania during August.

The Chicago-based company is in the process of rebranding SugarHouse as Rivers in order to consolidate its operations under one national brand. If it rolls the SugarHouse app into Rivers, it could emerge as a significant competitor for FanDuel. These apps are not currently available on iOS and securing that compatibility would give them a further boost. DraftKings will eventually arrive to provide FanDuel with further competition, but right now it looks like it should cement its status as the market leader there.

Pennsylvania actually has a larger population, higher GDP and more professional sports teams than New Jersey. Its sports betting handle is roughly one-third the size of New Jersey’s right now, but it is not as mature. It has been held back by a lack of online sports betting until the past couple of months, and it is now closing the gap. It has the potential to emerge as the top state in the country for sports wagering, although high taxes – the state charges an oppressive 36% tax on revenue, and it made $2.2 million on the $9.9 million revenue in August – could hold it back.

Iowa Makes a Strong Start

A number of states engaged in a race against the clock this year in order to launch legal sports betting industries before the NFL season began. Iowa pulled it off and legal sportsbooks began to open across the state in August. The Iowa Racing and Gaming Commission has released stats for the first two-and-a-half weeks, showing that operators made a strong start. In 17 days of action in August, the state recorded a total handle of $8.5 million and an impressive revenue of $2.2 million.

The early winner was Prairie Meadows, which reported a handle of $3.41 million and revenue of $532,771. William Hill runs the sportsbook at Prairie Meadows and the lion’s share of that revenue came from online wagering via its app. The Ameristar casino, which brought in a handle of $1.36 million and earned a win revenue of $480,650, was comfortably in second place, while a further 11 casinos shared the rest of the action between them.

Michigan Hoping to Cash In

Iowa is one of six states that offer online and brick and mortar sports betting, along with Nevada, New Jersey, Pennsylvania, West Virginia and Rhode Island. New York, New Mexico, Arkansas, Delaware, Mississippi, Indiana and Oregon all offer retail sportsbooks, but they have not yet launched online sports betting. Illinois, Montana, New Hampshire, North Carolina and Tennessee have all legalised sports wagering, but operators have not yet opened their doors.

Michigan is aiming to join the party, and a bill seeking to permit retail and online sports betting was approved by a House committee this week. Rep. Brandt Iden is sponsoring the legislation and he hopes it passes into law in time for the Superbowl on February 2, 2020. “Because this is already going on in the market place so we can protect those people who want to play and want to play legally, and we can, you know, make the state a little bit of money, which I think is also a positive,” said Iden. However, he told Legal Sports Report that the chances of including language to legalise sports betting and online gaming in the Michigan budget are slim.

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