Pennsylvania hits another record figure for sports betting and gaming as heightened levels of marketing spend drive sector forward.
Another day, another record in sports betting and online gaming handle in a regulated state.
This time it was Pennsylvania tearing up previous record markers.
October figures showed sports betting handle up nearly 14% month-on-month to $526m. Online gaming rose to just shy of $60m from $57m in September.
Clearly, something is going very right in Pennsylvania and that something is likely the marketing from the competing operators.
It comes down to the amount of promotional credits being laid out by the books. It makes it a great time to be a punter in Pennsylvania.
We can only see the bonus levels per property, but it provides a guide to what is being given away by the leading operators in order to entice players.
Leading the way this month in both revenue and promotional credits was FanDuel. It gave out $3.1m in bonuses and in return achieved online revenues of $17.8m. Add in retail and the revenue total hit $18.8m.
Behind came major rival DraftKings, which gave out $2.3m in bonuses and got a total revenue return of $9.2m.
Perhaps the most interesting one comes next. Penn National’s Barstool Sportsbook spent $1.8m in October, its first full month of participation in Pennsylvania, achieving revenues of $4.8m.
Tip of the iceberg
Total promotional credits for October came in at $11.1m compared to $12m in October, representing a 7.5% drop.
As a percentage of total revenue, though, October was step forward for the state, which can only tax revenue after promotional credits are discounted.
In September it was evident that the Pennsylvania market was becoming a predator trap with profits likely elusive.
But for the state coffers, at least, October was a better month than the previous one. That $11.1m was 26% of the $47.8m revenue, compared to the 96% of September’s tally.
The marketing well
For operators the spend on promotional credits is likely to be just the tip of their marketing budget.
This marketing expense and effort partly accounts for how brands are weighted on the Wedge Index and explains why FanDuel, DraftKings and Barstool are all top brands on the index
The amounts being spent on marketing by the top brands was illustrated by the recent figures from DraftKings. In the third quarter the company spent a whopping $203m on sales and marketing.
This was a huge 250% leap on the same period last year. Moreover, there is likely to be more spending rather than less in the months to come, despite the losses being incurred.
The point about Barstool Sportsbook mentioned earlier is that it has managed to secure a top five place in Pennsylvania. And all against such heavy spending from main competitors FanDuel and DraftKings.
It is a formidable market presence and no doubt there is more to come from ‘Stool Presidente’ Dave Portnoy and the rest.