Michigan online sportsbooks are starting to make some money.
This is not a plucky underdog, feel-good story, but rather an inevitable one.
When the March online sports betting numbers were released Tuesday by the Michigan Gaming Control Board, it represented a second phase of the market.
The first 10 days after the Jan. 22 launch and into February for the Super Bowl represented a pure customer acquisition phase.
That’s still the case in Michigan, and expect those efforts to ramp up again as football season approaches.
But the days of players turning a modest profit strictly from managing competing sign-up bonuses, profit boosts and free bets are short.
Over the long haul, it’ll be a mix of product, innovation and the stickiness of customers that wins out.
Inside the numbers: Michigan sportsbooks finally in the black
After reporting nearly $16 million in revenue loss over the first 38 days, sportsbooks finally came out ahead in March.
The early losses were expected and could continue at times in the still-developing days of this market before Michigan sportsbooks make money.
Michigan’s 12 online sportsbooks took $359.5 million in March bets, spurred largely by the men’s NCAA Tournament. The books reported $55.1 million in gross sports betting receipts after paying out losses.
That’s a 9.0% hold for the house, up from 3.1% in February and following an 11.6% hold in the brief January period.
The February blip was from some home-cooking: Michigan and Michigan State were piling up big basketball wins as the tourney approached, and Tom Brady led Tampa Bay to a Super Bowl upset. He’s a Michigan man remembered fondly here.
In January and February, companies wrote off their promotional bet spends, turning the holds into adjusted losses on the balance sheet.
In February, only BetMGM and William Hill reported revenue gains and paid taxes for the month. BetMGM paid 99.0% of the state’s overall $142,240 state tax haul.
That script flipped in March, as five sportsbooks became March taxpayers. Barstool, Fox Bet and WynnBET joined the aforementioned operators in the black.
In addition, DraftKings, FanDuel and Golden Nugget reported positive adjusted revenue for March. However, because of the net lifetime loss for DraftKings and FanDuel, the companies still haven’t yet paid the tax man here.
|Licensee||Online Brand||Total Handle||Online Handle||Retail Handle||Revenue (GGR)||Promos||State Tax||Local Tax|
|Lac Vieux Desert||PointsBet||$14,192,739||$14,192,739||?||$2,241,392||$2,277,883||$0||$0|
|Grand Traverse||William Hill||$10,997,415||$10,997,415||?||$1,033,670||$906,555||$10,678||$0|
|Little Traverse Bay||Fox Bet||$6,997,278||$6,997,278||?||$503,063||$365,165||$934||$0|
|Sault Ste. Marie||WynnBet||$2,249,239||$2,249,239||?||$418,529||$175,108||$15,141||$0|
|Keweenaw Bay||Golden Nugget||$789,792||$789,792||?||$70,649||$67,593||$0||$0|
Sports betting companies still not profitable
Still, all this doesn’t mean these Michigan sportsbooks make money yet in sports betting.
That can be hard to believe, given nearly $1 billion has been wagered here in just over a year. But the low-margin industry is a long game, one of slow growth after big early spending.
Because of marketing costs — Jamie Foxx murals overlooking Campus Martius don’t come cheap — it’ll be a slow, years-long effort for the market leaders to turn a big profit.
Snapshot: BetMGM expects Michigan profits in two years
Last summer, BetMGM set its sights on the very top of the online gambling market. Michigan was shaping up to be a crucial state to prove it belonged in the upper echelon with DraftKings and FanDuel.
Given its existing footprint in downtown Detroit with MGM Grand Detroit, if it was going to work anywhere, it probably needed to happen here.
The results have been nothing short of a rousing success. BetMGM leads in the internet gaming market by a wide margin here and is second in sports betting handle, trailing only FanDuel.
The company’s internal estimates have them second in the overall national market, CEO Adam Greenblatt told investors.
Even so, BetMGM said at its Investor Day this week that it expects to only turn a profit in Michigan in two years.
What about the next tier of Michigan sportsbooks?
After the top three, there is a drop-off to Barstool, the only sportsbook with a decline in handle from February to March.
The brand is a distant fourth now after a strong start.
Heavy promotional spending from PointsBet and William Hill have those brands as a solid fifth and sixth in the market, respectively.
The question remains for the bottom half of operators about whether they’ll spend big like the others, or stay content in their places.
Then, how big of a splash do FireKeepers, Parx Casino and Soaring Eagle hope to make when their products finally launch? Or, is waiting for football season just as prudent of a plan for sportsbooks at this point?
Bettors looking for deals, and the industry at-large, will be watching.