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DraftKings Casino recently celebrated its first month of business in West Virginia. Its weekly revenue has been rising steadily that entire time.
Through four weeks, the state’s first and so far only WV online casino pulled in a total of just under $825,000. Taking population into account, that works out to roughly the same casino revenue per capita that DraftKings is making in other states.
Players at DraftKings Casino placed over $37 million in bets during that time. Those wagers also increased over the first three weeks, but peaked at just under $12 million in week three. In the fourth week, betting activity dropped to less than $8.4 million, though the house’s take still rose.
A lot is bound to change in West Virginia in the coming months. For now, though, DraftKings is dominating the mobile sports betting space, and enjoying its online casino monopoly.
Over those four weeks, West Virginians placed nearly $50 million in legal online wagers. Roughly 75% of those were at DraftKings Casino, while 20% were at its sportsbook, and just 5% of bets were placed at at one of the two rival mobile sportsbooks, FanDuel or BetMGM.
Online betting in general is still far behind the state’s land-based casino industry, however. Even factoring in DraftKings’ sportsbook and those of its competitors, revenue from all mobile channels amounted to just $1.6 million. In that same period, West Virginia’s five casinos brought in over $35 million. The bulk of that, around $30 million, came from video lottery terminals and the rest from table games.
The drop in betting activity in the week of August 3 to 9 was dramatic, but probably not very concerning to DraftKings. Not only was it almost a 30% week-on-week decline, but it made week four the slowest to date for the casino in terms of daily activity. (Week one was lower in total betting, but the casino was only open for four days of it.)
The beginning of the fourth week happened to coincide with the resumption of play in the NHL and NBA. That presents the possibility that casino players were distracted by the return of sports. If that’s the case, though, it doesn’t show up in betting activity.
Sportsbook wagers did increase that week. However, they had been increasing all along, even as casino bets were on the rise. Moreover, the increase statewide, even including retail betting, was under $1.5 million. The drop in casino betting was more than twice that.
The reasons for the drop are more likely connected to the fact that revenue managed to rise in spite of it. In week three, DraftKings paid out 98.3 cents for every dollar it took in. The following week, it paid out just 96.9 cents.
That’s a big increase in hold and probably reflects a decrease in the amount of money getting paid out by bonuses and promotions. Promotional dollars drive betting activity. That sort of reduction would therefore explain both the decline in betting and the much larger proportion of bets being held by the house.
For instance, DraftKings is currently refunding new customers any casino losses they sustain in their first 24 hours, up to $200. The explanation for these trends could therefore be as simple as a drop-off in new signups and players slowing down their betting once the promotion expires.
It’s not surprising that DraftKings online casino is beating its sportsbook in terms of both wagers and revenue. Although the brand is known for its sports focus, it’s something of an inevitability that the casino vertical will dominate where it’s available.
Around the country, sports betting is getting far more attention from lawmakers. Already, 17 states plus Washington DC have legal sports betting in some form, and another four have passed bills and are awaiting launch. Only five states have legalized online casino/poker, however, and Michigan won’t go live for at least another few months.
New Jersey is the longest-standing and most fully developed legal market for online casinos in the US. Its casinos brought in over $82 million in July, while its sportsbooks brought in less than $30 million, even including a small amount of retail betting. The difference was smaller before the COVID-19 pandemic interrupted professional sports in the spring. However, even in January, New Jersey’s all-time best month for sports betting, online casinos held a small edge over mobile sportsbooks.
In Pennsylvania, the story is now similar. It wasn’t the case immediately, however, as casinos got off to a slow start in the state, and sports betting was already underway at that point. In West Virginia, too, sports betting had a significant head start. However, the timing of DraftKings Casino’s launch, while most professional sports were still on hold, has probably helped it take its place at the top of the pile.
For most industry watchers, what is surprising is the fact that DraftKings Casino is live in the state at all. Although West Virginia passed its gaming bill in March last year, the expectation was that a launch would be slow in coming.
DraftKings is quite new to the casino space. Its first such product launched in New Jersey at the end of 2018, but as a tab within its sportsbook app. It was only two months ago that it released its first standalone casino app, first in Pennsylvania and then in New Jersey.
The launch of that standalone app may have foreshadowed the company’s arrival in West Virginia, at least in retrospect. There was no formal advance notice, however. As recently as early July, it was a matter of speculation which company would be the first to launch their casino. Outside of the company and the state’s regulators, the first anyone knew about DraftKings Casino was when it went live. Many were guessing that the first launch wouldn’t be until early next year.
There’s similar radio silence now when it comes to DraftKings’ future competitors. The assumption at the time was that if DraftKings received the green light, others wouldn’t be long in coming. Yet we’re now closing in on six weeks that it has held its online casino monopoly. And there is still no word about who’s coming next, or when.