Gaming executives raised some eyebrows across the sports betting industry during third-quarter earnings releases.
Two in particular, Caesars Entertainment CEO Tom Reeg and DraftKings CEO Jason Robins, described October – especially two weeks in the middle of the month – as some of the most bettor-successful runs in U.S. gaming history.
While that only dates back to the overturning of PASPA in 2018 for most of the legal sports betting U.S. states, operators’ struggles showed signs of what happens when NFL favorites roll at an unprecedented rate. The house doesn’t turn over the kind of revenue they expect because that sport drives wagering, good and bad, across the country.
“October is not going to look great for anybody relative to what they were expecting, but this is just part of the business that you're in,” Reeg said in late October.
Now that the calendar has shifted into December and most U.S. jurisdictions have reported October’s sports betting revenue, the carnage is even clearer.
Bad time to be a book
Among the 30 reporting legal sports betting states, only one has produced a double-digit hold. Three others claimed at least a 9% return on the handle while two more fell in the 8% range. After that, nine states had win rates of 7%.
Half of all reporting jurisdictions met or failed to reach 7% with four states falling below 5%.
That’s a stark contrast to September, which was an unusually strong month and produced solid third-quarter revenue for U.S. sportsbooks. During that first full month of football, 30 states generated holds of at least 10%. The other two jurisdictions fell into the 9% range.
Several U.S. states, including New York’s most lucrative sports betting market, produced record revenue in September, but every one of the top 10 highest-handle states that have reported suffered a month-over-month gross revenue loss in October.
Illinois and Arizona have yet to release October sports betting revenue figures.
Big changes
| State | Sept. Revenue | Oct. Revenue | Change |
|---|---|---|---|
| New York | $206.1 million | $176.3 million | -13.9% |
| New Jersey | $119.6 million | $77.5 million | -35.2% |
| Ohio | $112 million | $81.1 million | -27% |
| Pennsylvania | $95.8 million | $58.1 million | -39.4% |
| Nevada | $80.9 million | $28.9 million | -64.2% |
| Massachusetts | $75.4 million | $50.3 million | -33.3% |
| Virginia | $70.9 million | $54 million | -23.8% |
| North Carolina | $70.1 million | $48.7 million | -30.5% |
| Maryland | $65.4 million | $49.6 million | -24.2% |
| Michigan | $59.2 million | $32.2 million | -45.8% |
| Indiana | $55.3 million | $35.1 million | -36.5% |
The biggest change by percentage was Nevada’s 64.2% month-over-month decrease. Revenue from football was down 79.2% year-over-year, and the sport’s hold was just 2%.
The Nevada Gaming Control Board even specified that the year-over-year shift was “due to a large percentage of favorites covering the spread” in October. The Silver State’s 3.6% hold on all sports betting is one of the lowest ever recorded.
Five of the top 10 states by handle saw revenue fall by at least 30%.
The October bloodbath extended to smaller states as well. Kansas reported the second-biggest change with revenue down 61.9% from September. Rhode Island had a win rate below 5%. Montana sportsbooks lost money for the month.
What happened?
Week 6 in the NFL, which fell right in the middle of October, hit sportsbook operators especially hard. Favorites, which public bettors typically bet on, went 10-3-1 against the spread that week with road favorites going a ridiculous 9-0. Only two underdogs won outright.
Week 7 wasn’t much better as eight favorites covered the spread, but even several of the seven underdogs that covered were backed by the public. Road favorites once again went undefeated, going 4-0 on the week.
Those kinds of results can especially hurt one of the key marketing tools U.S. sportsbooks use to draw customers.
“The shift to parlays cuts against you when you have sporting outcomes like that,” Reeg said.
Eyeing a shift
The latter part of October did even out some, and gaming executives hope a turnaround occurs in the year's final two months to get them back on track. However, DraftKings did scale back its 2024 guidance based on the rough October.
It’s still too early to compare November to October. Only Montana, which only offers retail betting and app wagering through Sport Bet Montana at authorized locations, has reported. The small state that took a loss in October bounced back with a 21% hold and its highest-ever revenue in November.
New York has yet to release full monthly figures, but based on its weekly reports, three of the last five of the previous four periods have produced a hold of at least 9.5%. The latest, however, saw the win rate fall to 7% during Thanksgiving week.
