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What goes up must come down. That’s the conventional wisdom, anyway. For the most part, however, it hasn’t been the case for online casinos, which enjoyed a huge revenue increase last spring when retail casinos shut down due to COVID.
The pandemic has been an unprecedented event. While many presumed that the gains would be temporary, there was no way of knowing for sure. Revenue did come down slightly when retail casinos reopened. In Pennsylvania, there was another blip when they closed again for a brief time in December, but reopened swiftly in January.
Still, there has been no large, persistent correction on anything like the scale of the increase early in the pandemic. Gross Pennsylvania iGaming revenue remains up almost 60% year over year. We may, however, be seeing signs of fatigue in the market. After holding roughly steady through April and May, PA online casinos and poker rooms experienced a significant slip in revenue in June.
The total gross gaming revenue for iGaming in the month was just over $100 million, down almost 10% from May. However, that loss can’t be attributed entirely to players returning to the retail casinos. Those have been operating without restrictions since early April, and also experienced a bit of a drop, from roughly $413 million revenue in May to $389 million.
Rather, it may be the case that people are finding other fun things to do now that summer is here. Furthermore, some players who discovered online gambling during the shutdown may simply be tiring of it. That said, New Jersey and Michigan have both continued to hold steady, so there may be additional factors at play in Pennsylvania that are harder to pin down.
Data for this article comes from the latest monthly report by the Pennsylvania Gaming Control Board.
The exact total for Pennsylvania gross gaming revenue from iGaming in June was $100,878,073. The state first passed the $100 million milestone in December, by this metric, though it wasn’t until last month that adjusted gaming revenue passed that mark. The difference between the two figures is that the latter represents taxable revenue only, after subtracting free play promotions.
Now, even GGR is on the cusp of dropping back into the eight figures. However, June was a shorter month than May, so the drop isn’t quite as large as it looks at first glance. May GGR was $113,770,086, which works out to a daily average of $3,670,003. June’s average was $3,362,602, a drop of 8.4%.
Even so, that’s the third biggest dip in revenue the market has experienced in its two-year history. The biggest was a 16% decrease in January, but that has to be looked at in the context of a 45% spike the month before. Likewise, the second-biggest drop was 8.9% last June, when the retail casinos had just reopened. That came on the heels of a 94% gain in April, followed immediately by a further increase 24% in May.
So, what’s different this time around is that there’s no recent jump that the decrease is correcting for. If it’s correcting for anything, it’s the longer-term gains we saw play out over the course of the pandemic.
It’s apparent that the drop is related to the market as a whole rather than strategic decisions by any particular operator. All the biggest certificate holders saw their revenue decline by similar amounts.
Penn National remains the dominant force, with the DraftKings Casino, BetMGM Casino and Hollywood Casino brands all under one roof. It fared the worst of the big names, however, shedding 11.6% of its daily average revenue. Even so, it still holds 37% of the total market, since its close competitors didn’t fare much better.
Rivers is the second place certificate, and now includes Borgata as a brand as well as its own BetRivers. It saw daily average revenue fall 8.2%, following the market trend very closely. Its share of the market is 27%.
Following those two are Valley Forge, down 6.2% and Mount Airy, down 4.3%. Thus, the top four were all affected, but the larger certificates took the worst of it. Nothing has changed in their relative standing, but the race has tightened up somewhat as a result of that.
Conversely, a few smaller certificate holders had a good month. Mohegan Sun Pocono had the best month of anyone, with its daily average increasing 11.4%. Harrah’s (Caesars) and Live! saw more modest gains.
One other detail to note is that BetMGM Poker and Borgata Poker, which are two skins on the same network, have started to establish themselves. Their combined market share rose from 13.3% to 16.7%. The remainder is currently held by PokerStars, but the launch of WSOP this month will add a further wrinkle to the situation going forward.
The PGCB is unique among iGaming regulators at the moment in that it breaks online casino revenue down into slots and table games. This is because they are taxed differently. Poker is also treated as a separate vertical.
Slots and table games have been doing a bit of a dance over the past year. For the latter half of 2020, growth for table games was outpacing that of the slots, but the trend has reversed itself in the first six months of 2021.
In June 2020, just after the first wave of the pandemic had crested (and online gaming revenue with it), slots accounted for 73.5% of total iGaming GGR in PA. By January, that had dropped to just 63.4%. Now, it’s back up to 71.8%.
Interestingly, a similar pattern played out the year before. It may therefore be the case that we see continued seasonality in these numbers going forward. One possible explanation is that the popularity of table games is tracking sports betting activity. Sports wagers tend to hit a low over the summer, while the most popular sports are on hiatus, and we have previously noted that more sports-focused operators like DraftKings and FanDuel seem to focus more on their table games than traditional casino companies, who emphasize their slots.
Further support for that theory may come when the NFL season resumes in September, if table games begin to increase their share again at that time.
As mentioned, summer is a slow time for sports betting, so it’s no surprise that Pennsylvania sportsbooks also saw handle decline in June. Online sports betting apps took $379 million in bets, a drop of 6.9% from May, or 3.8% when taken as a daily average. Retail sportsbook betting actually increased slightly, but accounted for less than 10% of the total.
Somewhat more surprisingly, sports betting revenue increased despite the decline in handle, thanks to an improvement in hold. On average, PA sportsbooks managed to win over 10 cents per dollar wagered. That’s a remarkable number, as hold is usually in the vicinity of 7% and rarely deviates by more than a percentage point or two from that, except when a large amount of action is on a single event, such as the Super Bowl.
As far as individual operators go, BetMGM Sportsbook was the big winner. Having operated on the Hollywood Casino Morgantown license since December, it managed a 15% increase in handle in June, and nearly a 50% surge in revenue. In revenue terms, it still holds only 7.5% of the market, but is starting to find its footing despite being a late arrival.
For more on PA sports betting, see the latest coverage at Legal Sports Report.
Here’s how the Pennsylvania market looked in June, broken down by operator and vertical. As always, monthly changes are based on the daily average, compensating for the number of days in each month.
Important note: Starting this month, Online Poker Report uses gross gaming revenue figures for all states to the extent possible, rather than adjusted gaming revenue. The latter, also known as taxable revenue, deducts promotional expenses, while GGR does not. This change means that the May numbers given in this table will be higher than those given in last month’s article.
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