Pennsylvania online gambling sites recorded yet another revenue record in February. The market, still in its infancy, saw its fastest monthly growth since PokerStars PA began operations under the license of Mount Airy in November.
That’s due in large part to the state’s latest big player, FanDuel Casino, which launched early this year in partnership with Valley Forge. Already putting up impressive numbers with a partial month in January, FanDuel became the clear market leader in its first full month of operation.
Online casino games and poker now generate nearly $20 million in monthly revenue in PA, with over $4.5 million of that going to taxes.
We can probably expect continued growth for the next few months as well, as social-distancing measures have forced a complete shutdown of land-based gambling in the state.
The growth of PA online gambling in February was underpinned by a few key highlights and trends:
As expected, FanDuel Casino is the clear market leader with $6 million in revenue during its first full month of operations (31% of the state total).
Rivers is now firmly established in second thanks its own growth and a decline in Mount Airy’s numbers. Based on the latter’s trajectory, it now looks more likely to face a challenge from Hollywood or Parx for third place than it does to catch up with Rivers.
Most established operators saw a February increase in the share of their revenue coming from slots, which are taxed at a higher rate than other products. However, FanDuel made 80% of its casino revenue from table games in February.
Between that and a dip in poker revenue, the percentage of revenue coming from slots declined — and so the effective tax rate, consequently.
Monthly Total (Change since January 2020)
Total revenue: $19.49 million (+40%)
Taxes collected: $6.78 million (+36%)
Net revenue: $12.71 million (+41%)
Slots: $9.63 million (+34%)
Taxes: $5.20 million
Revenue: $4.43 million
Table games: $8.03 million (+74%)
Taxes: $1.28 million
Revenue: $6.75 million
Poker: $1.83 million (-15%)
Revenue: $1.54 million
Although FanDuel’s numbers are impressive, it’s slowed down somewhat from its first week. Its online casino was only in operation for the final eight days of January and made $2.08 million in that time. Extrapolating from that would have given an estimate of $7.54 million over the 29 days of February.
Its actual $6.05 million in revenue is therefore a decline of almost 20% in daily revenue now that post-launch hype has worn off. Even so, it accounts for nearly one-third of total state online casino revenue and pulled in 27% more than its closest competitor, Rivers.
Slots dropped below a 50% share of total revenue for the first time. They contributed 77% of total taxes collected, down around 2% from previous months. The effective tax rate for all online casino revenue in February was 35% — down 1% from January.
Including state, county, and local taxes, slots are taxed at 54% while other games are taxed at a comparatively modest 16%.
The above figures don’t even include sports betting.
PA online sportsbooks took $294 million in bets in Feburary, while retail betting amounted to a mere $16 million. Total handle was down 5.3% from a record high in January, and hold fell to 3.3%.
As a result, total PA sports betting revenue fell significantly to just $10.8 million gross and $4.7 million after deducting promotional credits. Online betting accounted for nearly 90% of total bets and 95% of gross revenue.
Once the dominant force in Pennsylvania, sports betting is now barely larger than slots or table games individually. While online casino revenue is on the rise, sports action will continue to plummet over the next few months under the suspension of play by most leagues.
Read more about sports betting revenue at Legal Sports Report.
FanDuel launched its PA online casino in partnership with Valley Forge Casino on Jan. 24. Pennsylvania is the second state in which it operates one, but the first where it has attached its own brand to the product. It carries the banner for its sister site Betfair Casino in New Jersey.
February was its first full month of operation, and it brought in just over $6 million in revenue. Around 80% of that came from table games — meaning it isn’t only the largest operator in the state, it also pays the lowest effective tax rate.
FanDuel’s $4.8 million in revenue from table games accounted for 60% of the state total in February. With just $1.2 million in slots revenue, however, it is actually only in the middle of the PA pack for that vertical behind Hollywood, Parx, and Rivers.
The two Rivers sites saw their revenue rise by 34% in February while maintaining about a similar balance of table games versus slots. As a result, it put some distance between itself and former frontrunner PokerStars and is now the clear second-place operator in the state.
It remains a little bit heavy on slots — 66% of revenue — and pays a high effective tax rate as a result. Rivers’ net revenue after tax for February was $2.8 million. That puts it well ahead of Mount Airy, which pulled in $2.4 million.
When PokerStars Casino launched in November in partnership with Mount Airy, it looked like it was going to become the state’s largest operator. Indeed it was, but only for one month in December. Rivers pulled back ahead in January, and Valley Forge was unquestionably on the path to being the new market leader.
PokerStars revenue dropped 7% in February, helping Rivers to widen the gap. In large part, that was due to a 17% decline for PokerStars’ flagship poker product, still the only online poker room in the state.
That said, traffic has spiked more than 50% in recent weeks thanks to the closure of the state’s live casinos and poker rooms, so March revenue should be up across the board and for poker in particular. Competition could be coming soon, on the other hand, as partypoker says it’s almost ready to launch.
The good news is that despite poker and table game revenue falling for PokerStars, slots revenue was up 22%. Its total pre-tax revenue for February was $3.4 million, and it paid about $1 million in taxes.
Parx had a strong February to make up for a lackluster January. Its table games held steady but its slots revenue surged 61%. The result was a 43% increase in pre-tax gross revenue and 35% after tax.
With $2.35 million in total pre-tax revenue, Parx managed to get slightly ahead of its primary competitor. At this point, its looking likely that it and Hollywood will continue to switch places periodically in terms of market share.
If PokerStars continues to drop, we could soon end up with a three-way battle playing out in the middle of the state’s standings.
Hollywood has had months of stagnation when Parx has done well and vice versa, and February was no exception. Its slots revenue held steady, but its margin on its table games dropped considerably. Its focus has always been on its slots, however, so its decline in overall revenue was a mere 4%.
Slots are now more important than ever for Hollywood, accounting for 93% of its pre-tax revenue in February and 89% after taxes. It pays a huge effective tax rate as a result, and only kept $1.1 million of its $2.3 million in gross revenue.
Like PokerStars, Unibet also entered the Pennsylvania market in November. As a brand, it doesn’t yet have a strong presence in the US.
Unibet is no longer the smallest operator in the state since the launch of BetAmerica, but it’s still a small player. It reported less than $725,000 in combined pre-tax revenue, down 8% from January.
Like FanDuel, BetAmerica had its first full month of online casino operation in Febuary. In terms of size, however, it’s at the far opposite extreme. BetAmerica is primarily a sports betting brand, so its casino products are a bit of an afterthought.
Its combined pre-tax revenue in February was just $67,575 — less than a tenth of even Unibet, and barely 0.3% of the state total. It’s possible that it will grow into a more significant force eventually, but it seems more likely that it will continue to focus on sports betting given how competitive the online casino space is becoming.
Photo: Montgomery County Planning Commission | Flickr (CC BY-SA 2.0)