The Michigan August sports betting numbers came out last week, and they revealed three continuing trends:
- Total handle remains down compared to 2022
- Sportsbooks are still exceeding their revenue from last year, and
- MI sportsbooks are posting fantastic hold numbers, and are spending less on promotional offers.
That last fact is curious, because the state still has 14 sportsbooks, which means competition is still fierce for customers. One thing we know is that sports betting operators work hard to acquire new customers. Usually that takes an attractive (and expensive promo offer).
But, Michigan bettors are seeing lower promos. Meanwhile, sportsbooks are making more profits.
How is that possible, and what does it mean for sports fans in Michigan who want to bet on their favorite teams?
Will bonus bet dollars act like old soldiers and just slowly…fade away?
Why sportsbooks want to spend less on bonus bets
Bonus bets, such as the “$200 when you bet $5” promotion FanDuel Michigan Sportsbook is currently offering, are designed to give an enticing benefit for becoming a new customer. Bettors can use such offers to get more betting bang for fewer bucks. In that way, an especially savvy bettor may lay down a wager on a longshot with the bonus bets. In a sense, it’s like found money (though sportsbooks typically demand playthrough requirements), so laying it down on high odds is a wise move.
Sportsbooks want to get new customers and grab market share. But when a market begins to mature, that strategy isn’t the only factor that bares consideration. Right now in Michigan, as the numbers show, sportsbooks are making big profits because their hold is at high levels.
Explaining hold rate
What is hold in sports betting? That’s the percentage of wagers the sportsbook wins. Last month, FanDuel, which accepted the most sports bets in the state, posted a hold of 12.1%. That number is well above the 9-10% level that most sports betting operators are aiming for. In fact, in August, sportsbooks in MI combined for a 10.3% hold.
When sportsbooks win at a high level like that, it’s likely they start to assess whether it makes sense to offer large bonus betting dollars. Michigan sportsbooks are exceeding 2022 revenue by more than 11% compared to 2022. When profits are good, sportsbooks can forego promo offer money, or at least lower that spend.
In Michigan, sports betting operators are allowed to deduct promo offer spending from their taxable revenue. But even so, spending large sums of money to hand out bonus bets and promo offers to new customers is not a sustainable strategy.
In some states, like New York where the cost of doing business is very high (the tax rate there is 51%), there are sportsbooks that have expressed dismay at the promo dollars spent.
In Michigan, with hold rates high, and the market one of the strongest in the nation, it’s not necessary for sportsbooks to pour money into promo offers unceasingly.
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What lower promos means for Michigan sports bettors
If you’re still new to sports betting in Michigan and are considering which sports betting app or betting site to register with, promo offers are going to be waved at you. But, those promos are not as high as they once were. This actually has benefits for the betting market place.
By not being swayed by thousands of dollars in bonus bets, new bettors can choose a sportsbook based on more important factors, such as:
- Security and privacy
- Live betting features
- Live highlights and streaming in-app
- Performance of the app and dependability
- Customer support
- Options for depositing and withdrawing your money
Michigan bonus bets and promos not going anywhere soon
Bonus bets and promo offers are not likely to disappear. The National Football League season is back, and that’s the most popular time of year for sports betting. Some sportsbooks are bundling unique offers, such as a discount on NFL Sunday Ticket or other offers for NFL perks.
Suffice to say: Michigan sportsbook promos aren’t going anywhere.
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