Generally, we can divide all money in the industry into three pies:
The handle is the amount that passes through PA online gaming (in this case, online sportsbooks). That is the total amount of made bets, including both those that will win and those that will fail.
The revenue is all of the bets players have lost, excluding any bonuses or promotions that might have been used to make those bets. It is the total amount of money left with the operator.
Finally, there is profit. And, this is the part where online options are, from a financial standpoint, superior to brick and mortar establishments. Profit is everything you are left with when you pay for your gear, for the wages of people working, and all of the taxes and amortization that is necessary.
Nobody should understand this incorrectly - a good online sportsbook is very lucrative. But not all of the money wagered by the players will end up with the owner of the sportsbook. This is the same if you play for real money casinos PA: the net profit is different from the total revenue.
We should remember that, when we bet, we are betting against experts hired by the betting operator to make the odds (the wages for a betting analyst can range from $70,000 to over $250,000 per year and often includes bonuses). Betting is different from other types of gambling.
For example, if you play at PA poker sites or use PA casino apps, you will be playing against the computer via RNG games or other players. Betting, on the other hand, is a service offered to you, and the sportsbook determines the terms of this service (e.g., what the odds will be).
Important Statistics for Online Gaming in PA
#1 Billions of Dollars Moving
As reported by Statista, for the first 6 months of 2021, the amount of money handled by Pennsylvanian betting operators exceeded $3.3 Billion, breaking the record set in the same period of 2020.
If we combined the data from November 2018 to July 2021, we could see that the average handle was over $260 million, with the lowest amount being in November 2018 with only 1.41 million US dollars and the current record being held by January 2021 with an astonishing $615 million in just a month. It is estimated, following the current trends, that the total handle of the sportsbooks in PA will exceed 5 billion dollars by the end of 2021.
#2 Where Handling Goes, Revenue Follows
PGCB Monthly Sports Wagering Report
From examining particular examples, especially when comparing physical betting locations with online options, we can see that while the percentage of revenue compared to handling is greater with traditional operators, the nominal revenue and profit are increasingly larger with online betting. For example, by comparing popular online options like the Hollywood Casino at the Meadows with those with equal retail value but a smaller online presence such as Mohegan, we can see that even though the percentage of revenue is lower, the nominal revenue is much higher.
Let's explain in numbers. As of October 2021, Mohegan Casino's total sports wagering handle is 11,005,837 USD. 2,121,146 USD of this figure comes from retail wagering and 8,884,691 USD from online wagering. As of the same date, Hollywood Casino at the Meadows has a sports wagering handle of 204,099.136 USD in total.
At first glance, there seems to be a huge difference. However, when we examine the handle values in retail and online, we see that this difference is only due to online wagering. Because Hollywood Casino has a handle of 2,389,681 USD from retail wagering, and this is almost the same as Mohegan.
So, where does the almost $200 million difference come from? Hollywood Casino gets to handle 201,709,455 USD from online wagering. In other words, even though retail values are almost equal, online wagering can make a huge difference.
#3 Online Options are Taking the Pie
PGCB Monthly Sports Wagering Report
While we know that the total handle of sportsbooks in Pennsylvania in July 2021 was $304 million, that is far from being an even split. From that number, more than 90% or $275.44 million was from online sportsbooks. Accessibility here plays a huge role as online options are available for players all over the state, making the market more competitive and thus more attractive for players.
Even here, we can notice that the revenue margin is slightly lower for online options, but the numbers alone can’t be compared. Additionally, since the maintenance and operations costs for online options are lower, a much higher percentage of the revenue is left for profits. To explain in numbers, we can give a small example. In July 2021, online sports wagering handled 275.449.861 USD in total. This may seem like a big number, but in October 2021, it got even bigger: 714.094.431 USD. Simply put, in less than 5 months, online betting became much more profitable.
#4 August 2019 Represents a Milestone
When we examine the monthly sports betting handle data in Pennsylvania starting from 2018, we can see very interesting results. Figures from November 2018 to July 2018 show an average handle of under $50 million, but as of August 2019, that figure has nearly doubled and never dropped below $100 million again (with three exceptions we'll talk about below). To explain what we are talking about, let’s just say the overall handle was 59.33 million dollars in July 2019, but suddenly raised to 109.04 million dollars in August 2019.
So, why the sudden doubling of handle value in August 2019? The main reason for this is that at the end of July 2019, the Pennsylvania Gaming Control Board (PGCB) approved the opening of three casino sites. In July 2019, Parx Casino, Hollywood Casino, and SugarHouse Casino launched their own sites and you can see the difference in just one month. The extra handle brought by online wagering is much higher than retail and this does not change until April 2020.
#5 April 2020 Is Another Milestone
We mentioned above that the monthly sports betting handle value has not fallen below $100 million since August 2019, but there are three exceptions to this situation. Now it's time to talk about those exceptions: From April 2020 to June 2020, the total handle value drops below $100 million again. In April 2020, the total handle suddenly dropped to 46.02 million dollars from 131.33 million dollars, and while it raised to 89 million dollars in June 2020, it never surpassed $100 million during this period.
There's a simple reason why handle numbers started to drop from March 2020, and you've probably guessed what it is: COVID-19. The global pandemic has caused land-based (retail) sports betting services to cease altogether for a long time. Like other US states, all retail businesses in Pennsylvania had to remain closed for months. We see that this situation was especially effective in April, May, and June. However, unlike other sectors, sports betting has recovered itself in a shorter period of time because as of July 2020, we are starting to see handle figures of over 100 million dollars again. In fact, as of July 2021, the actual figure is 304.42 million dollars.
The reason for this rapid recovery is that operators quickly realized the importance of online betting and started to offer their services completely online. Frankly, before the closures, online sportsbook services were only seen as an “option” and casinos focused on retail betting. However, the importance of online services was revealed during the shutdowns, and for the same reason, iGaming has become one of the fastest-recovering industries.
#6 FanDuel and Football Season Doubled the betting Revenue
We shared the sports betting handle data above, but this industry also includes revenues. As we mentioned at the beginning, handle and revenue are different concepts, and it may be more accurate to use revenue data to understand the real size of the industry. In this regard, when we look at the revenue from November 2018 to August 2019, we see that the numbers are not impressive: the total revenue could not exceed 10 million dollars. However, in September 2019, total revenue doubled (19.33 million dollars) and did not fall below $10 million again until March 2020. Interestingly, in September 2019, the total handle value also saw a jump to 194.50 million dollars from 109.04 million dollars in August.
The reason for the sudden rise in September 2019 is simple: September is the month when the American football season starts, so there is already a certain increase in total revenue values in the same month every year. But this spike isn't just because of the start of the football season: September 2019 is also the month when the FanDuel brand expanded its PA operations and launched a mobile app. This was so effective that FanDuel alone started to control a large part of total revenue.
#7 For Three Months, Both the Revenue and Handle Were at Record-Low
The decline in sports betting revenue between April 2020 and June 2020 is, predictably, due to COVID-19. And this is a pretty serious drop: In February 2020, the monthly revenue was 11.43 million dollars. In March 2020, it became 8.61 million dollars. And, finally, in April 2020, the revenue suddenly drops to 3.2 million dollars.
The same thing can be seen in total handle figures: Once again February 2020 is fine (almost record-breaking fine) with a total of 329.77 million dollars. In March 2020, the handle drops more than 50% to 131.33 million dollars. In April 2020, it is another record-breaking figure, but this time in a negative way: 46.02 million dollars. Once more, these drops are due to the global pandemic.
However, like all online services, it didn't take long for sports betting to recover, both in revenue and handle. We're starting to see revenue figures of over $10 million again as of July 2020. And as of July 2021, the overall figure reaches 27.48 million dollars. Likewise, the handle raises to 164.78 million dollars also in July 2020, and one year later (in July 2021), it is 304.42 million dollars.