In Virginia, Bet365 enters the sports betting scene as FanDuel maintains its dominance.
In the eye-catching February sports wagering revenue report published by the Virginia Lottery, a standout figure was the skyrocketing promotional deductions reported by operators, amounting to a whopping $7.8 million. This surpassed the promotional deductions reported in January by more than tenfold and marked the first time since September that the figure surpassed the million-dollar mark[1].
However, a mystery lurked: which mobile operators in the Old Dominion would be eligible to count promotional deductions against their gross revenue? The Virginia Lottery keeps operator-specific figures under wraps in its monthly reports, but it's known that the heavyweights - FanDuel, DraftKings, and BetMGM - didn't qualify for such credits. The trio, alongside four others, could no longer deduct promotional and bonus credits from their gross revenue starting last July due to a budget amendment that passed ahead of the 2023 fiscal year[1][3].
But the riddle was swiftly unraveled when the Virginia Lottery's public records department fulfilled a Freedom of Information Act request from Sports Handle. Unsurprisingly, the majority of the astronomical $7.8 million sum – a stunning 96% – came from bet365 during its inaugural full month in the state[2].
The significance of promotional spend in Virginia is a delicate subject. With the passage of the aforementioned budget amendment, the state has seen a sizeable increase in tax revenue, totalling over $47.6 million for the first nine months, compared to the $35.5 million received in the first 17 months of sports wagering[1].
In the six months before the budget amendment was implemented, FanDuel, DraftKings, and BetMGM averaged a hefty $10.1 million in monthly promotional deductions. With Virginia's 15% tax rate on sports wagering, the state forfeited over $9 million in tax revenue from these three operators alone in the first half of 2022[1]. The burning question now concerns bet365's strategy and ability to convert its considerable promotional expenditure into customer acquisition.
Bet365's promotional spend helped its gross gaming revenue dip into the red, with a negative adjusted gross revenue of nearly $2.7 million. It managed to avoid state taxes despite reporting $5.3 million in gross revenue thanks to a staggering 33.9% hold on $15.6 million handle[1]. However, its long-awaited U.S. market entrance might have played a role in this tactic. The three states where bet365 has launched – New Jersey, Colorado, and Ohio – are all among the top ten nationally for handle. bet365 has already splurged $25.6 million in promotional spend in Ohio's first two months of betting, nearly double the $13 million in adjusted gross revenue generated on the back of an 18.6% win rate[1].
Ohio might come with added risk for bet365, as it cannot deduct any promotional credits until 2026. Despite this, the simultaneous launch in Ohio might facilitate bet365 flooding the market, as its $69.6 million handle ranks fifth overall and is just $4.4 million shy of Barstool Sportsbook's fourth place in Ohio[1]. Furthermore, its $15.6 million handle in February accounted for 3.6% of Virginia's $433.8 million in accepted wagers[1].
Elsewhere in Virginia, FanDuel maintained its stranglehold on the top spots for gross revenue and handle. It reported $20.4 million in gross revenue, realized an 11.6% win rate, and handled $176.4 million[4]. DraftKings also surpassed the nine-figure mark in handle, claiming $116.6 million and boasting a 6.3% win rate for $7.3 million in gross revenue[4]. BetMGM joined the trio in both categories, earning just over $4 million in gross revenue from a $59 million handle, but its 6.8% win rate was its lowest in the last 17 months[4].
Caesars held the fourth-largest share in gross revenue, reporting $1.4 million and being the only other mobile operator to claim seven figures. Betway and Bally Bet were the only mobile books to record gross revenue losses for February, but Hard Rock's retail location in Bristol made a profit, collecting $102,111 on a handle of $1.2 million[4].
- The Virginia Lottery's report revealed that a large portion of the promotional deductions came from bet365, a casino-and-gambling operator within the online sports-betting market.
- The promotional spend by bet365 was significant enough to cause a dip in its adjusted gross revenue, with a negative figure of nearly $2.7 million.
- Despite the lack of promotional deductions for bet365 in Virginia due to a budget amendment, the company's promotional expenditure was strategic in customer acquisition and market flooding.
- In the competitive Virginia sports-betting market, bet365 ranked fifth in handle and claimed 3.6% of the total accepted wagers, indicating a strong presence despite certain risks.
