Soaring demand for sports betting drove a strong recovery for the gambling sector in Q3, according to a new report from the American Gaming Association. The Covid-19 pandemic caused revenues to dip to historic lows in the second quarter of 2020, but revenue then increased 294% sequentially in Q3. The AGA hailed sports wagering as the star performer, bolstered by an unusually crowded sporting calendar and huge interest in new legal betting markets in Colorado, Illinois, Michigan, and Washington, D.C.
Gaming revenue for the first nine months of 2020 is still down 36.5% year-on-year. By contrast, the overall US GDP declined by just 3% during the same period, showing that the gaming industry has been disproportionately impacted by lockdown measures. However, sports betting revenue is up 27% year-on-year to $667.8 million for the nine months to September 30, and the AGA expects a strong finish to the year too.
Total gaming revenue for Q3 was down 18.9% to $9.04 billion. That was down to drastically reduced footfall in land-based casinos, with many Americans choosing to stay at home while the pandemic surges across the country. Slots were down 19.3% and table games dipped 31.2%. Yet sports betting revenue increased 47.1% to $352.3 million, and online casino gaming revenue grew 232.4%, suggesting that operators with strong online sportsbook and casino platforms stand a good chance of flourishing in the months and years ahead.
AGA president and chief executive Bill Miller was cautiously optimistic as he delivered the results. “While these quarterly results are promising, the reality is a full recovery is dependent on continued public health measures to control prevalence rates,” he said. “As state and local officials respond to current COVID-19 outbreaks with additional restrictions, urgent Congressional action to provide COVID-19 relief is even more crucial. Gaming employees and communities depend on it.”
More than 100 casinos reopened between July and September. That took the total number of operational commercial and tribal casinos to 902, which is 90.8% of the country’s total. Five states – Arkansas, Mississippi, Ohio, Pennsylvania and South Dakota – outperformed their Q3 2019 figures. However, online sports wagering was the key driver of revenue increases, and the AGA expects the trend to continue.
Americans wagered a record $5.95 billion at legal sportsbooks in Q3. October is expected to be the strongest month for sports wagering in US history. The handle currently stands at $2.82 billion, and Illinois is expected to push it past the $3 billion mark when it reports its October figures. Illinois is pretty new to the sports betting sector, but it had the fourth largest handle in September, behind only New Jersey, Nevada and Pennsylvania. New Jersey, Pennsylvania and several other states reported record-breaking handles in October, and 2020 is certain to smash records for sports betting.
Twenty-seven out of 50 states have now legalized sports betting in one form or another. New Jersey, Nevada, Pennsylvania and Illinois are the biggest of the bunch, but there are also high hopes for the likes of Michigan and Virginia. Sports betting in Virginia could bring in up to $412 million in revenue per year, yielding approximately $61.8 million in tax revenue for the state, according to some projections.
Michigan has already rolled out land-based sportsbooks, and online sports betting sites are set to launch at the start of 2021. On Thursday, the Michigan Gaming Control Board approved provisional licenses for 15 online sportsbook operators. William Hill, FanDuel, BetMGM, DraftKings, Fox Bet, BetRivers, TwinSpires, PointsBet, Kambi, GAN, Parx, Golden Nugget, Kambi, NYX and Wynn Sports all had their applications approved.
The firms must now complete regulatory requirements and testing, while they must also secure individual licenses for certain employees. “The platform providers still must meet other regulatory requirements before online gaming and sports betting can launch in Michigan,” said MGCB executive director Richard S. Kalm. “The launch date will depend on how quickly they can fulfil the requirements. “The platform providers’ ability to meet the requirements of the laws and rules will determine which entities can be licensed for launch first.”
FanDuel and DraftKings have emerged as the top two operators in many states, including New Jersey and Pennsylvania. Their brands were already strong due to their bold DFS marketing campaigns, and they have invested heavily in new customer acquisition since pivoting towards sports wagering. William Hill remains the clear market leader in Nevada, and it has also mounted an ambitious expansion drive across the country. It is now working closely with Caesars Entertainment, and Caesars is in the process of acquiring William Hill.
Yet the market is growing increasingly competitive, and BetMGM stands out as a brand that could vie for supremacy. It is a joint venture between MGM Resorts and British firm Entain, which was known as GVC Holdings until it changed its name this week. Entain owns popular European brands like Bwin, Ladbrokes, Coral and Sportingbet, and it has provided operational expertise and proprietary sports wagering technology for BetMGM. BetMGM recently launched a sportsbook in Tennessee, and it also added an online casino in Pennsylvania. By January, BetMGM plans to be live in 12 states, with an addressable market of 75 million people. It then expects to expand into 20 states by the end of 2021.
“We are firmly on track to take further leadership in the U.S. market, as well as in many other newly regulated markets that are now opening around the world,” said Entain chief executive Shay Segev. “At the heart of our growth strategy is a determination to bring the best player experiences and protections to our industry as technology moves sport and interactive entertainment into a new era. In the US, we invested in creating the right building blocks for the BetMGM platform to grow and become a long-term leader in the US, with superior technology and capabilities, and this is now paying off.”