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- FEATURE: Ontario Online Gambling
Pennsylvania’s legal online gambling market is all grown up. Sixteen months in, it has experienced what is only its second month without significant growth.
Whereas losses in June could be attributed to the reopening of land-based casinos, there is no external cause this time. Rather, it seems the market has reached maturity and the “honeymoon” phase of rapid growth is at an end.
For both verticals, what little change there was amounts to a rounding error. Casinos picked up about $30,000 in additional revenue while poker dropped by half as much, for a net change in the state’s total iGaming revenue of just $15,075.
Tax revenue dropped, however, also by a small though more significant amount. State, county and local governments collected a grand total of $24.5 million, a drop of $371,399. The reason for this was a continued shift in activity away from slots and towards table games, which are taxed at a much lower rate.
Data comes from the latest report published by the PA Gaming Control Board (PGCB).
Here’s what these monthly revenue trends look like by the numbers:
Month-on-month, Pennsylvania’s iGaming market showed essentially zero growth, 0.025% to be specific. Underlying this, however, there was some slight growth in daily revenue – just over 3% – almost exactly counteracted by the abbreviated length of the month.
Similarly, there wasn’t much movement for most of the larger operators. Penn National (Hollywood/DraftKings), Rivers and Parx all saw their gross revenue change by less than 1%. Valley Forge (FanDuel) did a bit better, picking up 3.6%, while Mount Airy (PokerStars/Fox Bet) took a hit of 8.5%, mostly due to declining slots revenue.
Though the changes for Penn and Rivers were both small, they were in opposite directions and the separation between the two continued to close. Just 5.6% now separates them in the race for market leadership, and if recent trends continue, Penn should emerge as the number one some time in the first half of 2021.
Smaller sites saw a bit more action. In particular, Caesars had a great month, nearly doubling its overall revenue. It remains an unusually small player in the market for such a recognizable brand, but has now at least grown large enough at $1.5 million revenue in November to have Unibet ($2.4 million) watching its rear view mirror.
Revenue / ∆ Monthly (∆ Daily Avg.) / ∆ Yearly:
November 2019 was the month that PokerStars made its hotly anticipated entry to the Pennsylvania market. Unibet also arrived the same month, although it was much small in size at first. These arrivals created a leap in the market, particularly due to the addition of PokerStars’ poker revenue.
As a result, annual growth numbers are much lower this month than they had been through the beginning of the market’s second year. They’re still impressive, however, with casino games up 646%. The next major newcomer, FanDuel, launched at the beginning of this year, so annual growth will drop again come January. Until then, it isn’t a very meaningful metric, as there were still many vacant seats at the table in 2019.
One big story for the month is the continued surge of table games relative to slots. The two have been converging for a while, but table games got a huge boost in October thanks to the launch of live dealer games. That continued to a lesser extent in November, and for the first time ever, more money was wagered at the tables – $1.18 billion versus $1.08 billion on slots.
That said, gross revenue for slots remains more than double that for the table games, due to the higher margin on slots. Operators are pushing their table games hard, however, because the tax rate is so much lower. Operators’ combined after tax revenue was $18.1 million for slots compared to $15.1 million for table games, so slots still hold the edge there, but we could see the two switch places in 2021. That would make Pennsylvania a unique market, as everywhere else it’s well-known that slots are the primary driver of operator profits.
|Rivers Philadelphia||$13,786,844||$2,785,876||$-||$16,572,721||0% / +423%|
|Penn National||$9,049,618||$6,647,024||$-||$15,696,642||+1% / +740%|
|Valley Forge||$4,732,757||$5,651,638||$-||$10,384,395||+4% / -|
|Mount Airy||$2,374,193||$1,554,656||$2,409,235||$6,338,085||-9% / +112%|
|Parx||$5,187,196||$729,129||$-||$5,916,326||0% / +296%|
|Mohegan Sun||$2,235,243||$214,473||$-||$2,449,717||-6% / +1764%|
|Caesars||$1,188,809||$334,817||$-||$1,523,626||+97% / -|
|Wind Creek||$334,866||$22,681||$-||$357,547||-40% / -|
|Presque Isle Downs||$231,648||$10,707||$-||$242,355||-50% / -|
|Live! Philadelphia||$272,628||$21,465||$-||$294,093||+6% / -|
|Totals||$39,393,804||$17,972,466||$2,409,235||$59,775,505||+3% / +519|
Pennsylvania sports betting revenue was also quite stagnant, following a big month in October. Total revenue from retail and online channels combined increased by less than $700,000. Online revenue increased somewhat, while retail took a dip.
The bad news is that handle was down across the board. Retail bets dropped 17%, and online fell 5%. Revenue only rose despite that because the books won a disproportionate number of bets. Hold was already high in October, at 9.1% and rose to 9.5% in November.
Hold is unlikely to remain quite that high, so revenue would be expected to come back down soon if all other things were equal. However, NBA basketball resumed in December, and the NFL is heading into the playoffs, both of which should compensate and keep revenue moving in the right direction.
See more of November’s sports betting data at Legal Sports Report.