The online and retail sportsbooks from Pennsylvania have shown that high taxes might not actually be the barrier to success expected by some industry observers. In December 2019, they reached record handle of more than $342.6 million, capping a year that produced $1.5 billion in wagers, including $1.1 billion in online bets.
The handle, PlayPennsylvania analysts said, is expected to more than double as 2020 offers a full year of online sports betting and increasingly competitive operators bid.
The state’s sportsbooks approved $342.6 million in wagers during December, up 8.2 percent from $316.5 million, while online sportsbooks generated $297.5 million, 86.8 percent of the handle. These bets generated revenue of $17.5 m, down from the $20.6 million profit in November, but still poured $3.9 million into state coffers.
In 2019, Pennsylvania created $1.49 billion in bets, including $1.1 billion in online bets, $84.1 million in taxable revenue, including $43 million in online and $28.6 million in state taxes.
“That last two months of 2019 began to show us the real potential of the Pennsylvania market,” said Dustin Gouker, analyst for PlayPennsylvania.com. “The launch of DraftKings in November, adding one of the best-known brands to Pennsylvania, helped push online betting forward. And now that the online market is maturing, it is entirely possible that 2020 could bring in $4 billion or more in online and retail bets.”
In contrast, New Jersey, the number two market for the nation as calculated in handle, attracted $4.6 billion in bets in 2019. But the state tax haul for Pennsylvania was more competitive with New Jersey, which created $36.5 million of revenue.
“Pennsylvania is beginning to succeed where it wanted to most: making sports betting a significant revenue driver for the state,” Gouker said. “Its tax rate is significantly higher than every other state, which has slowed the industry’s growth. But Pennsylvania is the most populous state to fully legalise sports betting, and that has proven to be too enticing for operators to ignore.”
FanDuel Sportsbook remained the state’s online leader at Valley Forge Casino, taking $154.5 million in the December bets, up from $149.7 million in November. That has yielded $7 million in taxable income. The $7.7 million handle for Rivers Philadelphia, down from $8.9 m in November, has overtaken the retail market. That brought in sales of $590,177.
“The Rivers Casino books in Pittsburgh and Philadelphia have capitalised on their markets to set themselves apart,” Gouker said. “But the proliferation of online betting has muted the growth of retail sportsbooks. The convenience of online betting, coupled with a robust in-game experience, is tough for retail sportsbooks to match.”