The Pennsylvania online gambling market is getting much more crowded than it was a few months ago.
After the first three online casinos launched last summer, there followed several months of quiet expansion without any new competitors appearing. Two more launched in November, however, including the much-anticipated partnership between PokerStars and Mount Airy Casino.
Now, two more operators have gone live, bringing the total to seven. Valley Forge launched on Jan. 24 in partnership with FanDuel. Presque Isle snuck in just before the month drew to a close, though we won’t have an accurate picture of how it’s performing until next month.
Total revenues for the state have been growing every month since online gambling first launched last July, and January was no exception. It was therefore yet another record month, with the seven operators putting up a combined $14 million in gross gaming revenues, with $5 million going to state and local taxes.
The growth of PA online gambling in January was underpinned by a few key highlights and trends:
The Pennsylvania market is looking more complex by the month. If the FanDuel/Valley Forge partnership continues putting up numbers like it did in its first week, it will be the new dominant force in the market. Second place will become a toss up between PokerStars/Mount Airy and Rivers.
Hollywood/Penn National could also become competitive with those two if its strong growth continues, while Parx has been gradually losing market share. Unibet/Mohegan Sun remains tiny, but is growing rapidly and we haven’t yet seen enough from Presque Isle to know where it will stand.
Monthly Total (Change since December 2019)
Total revenue: $13.96 million (+31%)
Taxes collected: $4.97 million (+13%)
Net revenue: $8.99 million (+32%)
Slots: $7.19 million (+29%)
Taxes: $3.88 million
Revenue: $3.31 million
Table games: $4.61 million (+79%)
Revenue: $3.87 million
Poker: $2.16 million (-13%)
Revenue: $1.81 million
Generally speaking, the growth of the Pennsylvania market has been slowing in months without the launch of new sites. Revenues grew 21% in September, 20% in October, 95% in November thanks to the launch of PokerStars, and just 10% in December. January bucked that trend.
Overall revenues were up 31%, but even subtracting that of the new sites, we see better growth than December. The five previously existing operators collectively saw their revenues increase 12%. They may have done better still without the increased competition.
Table game revenues increased much more than other verticals, largely due to the FanDuel/Valley Forge launch. The new site’s revenues are far more heavily skewed towards table games and away from slots than most of its competitors. Just 18% of its pre-tax revenues came from slots, which is a similar ratio to Mount Airy’s.
Conversely, poker revenues were down 13%. These still come entirely from PokerStars/Mount Airy, as there’s still no sign of PartyPoker, WSOP/888 or Parx’s online poker room. PokerStars’ poker vertical fared worse than its table games, but not as badly as its slots, which fell 22%.
The above figures don’t include sports betting. That also debuted last year, a few months earlier than the first online casinos. As a result of the head start and the popularity of sports betting in the US, it has always been the largest vertical in Pennsylvania. It has also generally been larger than all other verticals combined. That was narrowly not the case in December, but is once again true thanks to a big surge in January.
Total PA sports betting revenue grew to nearly $23 million in January. Online betting accounted for nearly 90% of total bets and 80% of revenues.
Read more about sports betting revenue at PlayPennsylvania.
FanDuel’s new Pennsylvania is its second online casino, but the first one to use its own branding. In New Jersey, its casino operates under the Betfair brand.
It launched in Pennsylvania in partnership with Valley Forge Casino on Jan. 24. It was therefore only in operation for eight days before the end of the month. Even so, its $2 million in gross revenues accounted for 15% of the month’s total. Moreover, 82% of that came from table games, which are taxed at only 16%, compared to 54% for slots. As a result, Valley Forge is in even better position when it comes to after-tax revenues, with an 18% share in January.
It’s possible that Valley Forge had a hot first week due to post-launch hype and promotions, but if its per-day revenues continue at the same pace, it will bring in roughly $7.25 million in February. If that’s the case, its resulting market share could be in the vicinity of 40%, putting even Mount Airy and Rivers to shame.
Rivers was the market leader right through November. It fell behind Mount Airy following the PokerStars launch, but the two are now engaged in a tight race. Unfortunately, with FanDuel in the picture, that race is now likely to be for second place.
Rivers now operates two online casinos in the state, one under its old PlaySugarHouse brand and one under the new BetRivers name. It received fewer bets in January than December, with slots dropping 11% and table games 26%. It increased its margins significantly for both verticals however, and as a result, revenues went up, by 29% and 3% respectively.
All told, it pulled in over $3.5 million in gross revenues in January, up 20% from December. That was enough to make it the highest-grossing operator, slightly ahead of Mount Airy. The increased dependence on slots hurt its bottom line, however. Slots now make up 68% of its revenues, up from 63% in December, and consequently its after-tax revenues increased only 16%.
PokerStars/Mount Airy debuted in November and, like Valley Forge, had only a partial month to begin with. Although it placed second for revenues that month, it was expected to surge into first in December and did not disappoint. That month, it pulled in over $4 million in gross revenue and $3.1 million after taxes, while other operators saw revenues decline for the first time, presumably due to players migrating to PokerStars.
That trend reversed itself this month, however, as Mount Airy was the only operator to see revenues decline in January. With just under $3.5 million in gross revenues between its three verticals, it fell slightly behind Rivers. Each currently holds about a 25% share of the market.
However, because only 17% of Mount Airy’s revenues came from slots, it retained the top spot in the state for after-tax revenues, at $2.7 million.
Penn National rebounded strongly in January following a weak December. That month, it suffered the worst losses of any of the state’s operators, but its gains this month were the strongest.
Its total bets received were up for both slots and table games. The increase was larger for table games, but its margin fell for those games, while it increased for slots. As a result, the increase in gross revenues was larger for slots, at 46% compared to 19%. The increase in overall revenue was 40%, to $2.4 million, giving it a 17% share of statewide gross revenues.
It remains more heavily skewed towards slots than any of its competitors, however, with these accounting for a whopping 89% of its revenues. As a result, its after-tax revenues were just $1.2 million.
Parx had a so-so month. Bets received and gross revenues for its slots were up 12%. Action at its table games decreased, but a compensating increase in its margin held revenues close to even. Its revenues increase 8% before tax, and 6% after tax. In terms of market share, it’s now well behind Penn National with just 12% of the state’s gross revenues, and could soon find itself challenged by Mohegan Sun/Unibet.
Like Mount Airy, Mohegan Sun entered the Pennsylvania market in November. Its online partner, Unibet, is not a major force in the US at the moment, however, so its launch went almost unnoticed.
Though still very small, it is growing rapidly. Its monthly revenues tripled in December and nearly doubled again in January, to $786k. That’s still just 6% of the statewide total and half that of Parx. Depending on how much its growth slows, it could become a significant factor in the market within a few months.
The latest addition to the market is Presque Isle Downs, in partnership with BetAmerica. It went live very late in the month and reported under $10,000 in gross revenues for January. For now, its online casino is desktop-only, though its mobile app is expected to launch soon. As a result, we have little idea of how big of a player it will be once fully operational.
That said, it will probably be closer in size to Parx and Mohegan Sun than to Valley Forge, Rivers and Mount Airy. The BetAmerica brand is a joint venture between business-to-business platform provider SBTech and Churchhill Downs. Its focus, like Presque Isle itself, is on racing and sports betting. It’s therefore unlikely that it will invest the money and effort required to grab a big share of the online casino market.