The launch of legal sports betting in Ohio is imminent and at least for some bettors, it will mean no more crossing into Michigan to place their bets.
Ohio’s launch is expected to have a minimal impact of less than 3% on Michigan sports betting handle in 2023, according to our estimates. That projected drop could translate to about $10 million in lost handle, $775,000 in lost revenue and $65,000 in lost state taxes.
GeoComply data confirms a strong betting appetite in Ohio, where betting will begin on Jan. 1, 2023. According to PlayUSA projections, Ohio will immediately surpass Michigan in sports betting volume and revenue post-launch.
Michigan will lose some sports bettors to Ohio launch
With Michigan having legal online sports betting since January 2021, Ohioans were free to cross the border into Michigan and place bets.
That said, the Michigan border doesn’t sit close to many populous cities in Ohio, outside of Toledo.
GeoComply, a location detection software used by sportsbooks, shows that most of the Ohio traffic coming into Michigan to wager comes from that pocket near the southeast corner of the Mitten State.
The image on the right shows I-75 at the Ohio/Michigan border. Red dots indicate geolocation failures to access Michigan sportsbooks. Green dots are geolocation passes.
The high concentration of geolocation passes around I-75 on the Michigan side just north of Toledo hint at some action coming from Ohio-based bettors crossing into the state to bet.
While the GeoComply data does not provide hard evidence for the actual number of bettors making the drive across the border to place bets in Michigan, it does indicate some crossover. With increased sports betting marketing already taking hold in Ohio in preparation for launch, it’s no surprise that hundreds of thousands of people have unsuccessfully tried to access Michigan sportsbook apps from within Ohio.
Number of pings does not equal number of people
Remember this data describes geolocation pings or attempts to verify a location, not individual users. We can assume that many individuals had multiple failed attempts. And further, only a small subset of people with failed attempts actually make the trip across the border to access the apps.
If even 10% of these pings translated to Ohio-based bettors crossing the border to use Michigan apps, that would be 20,820 customers. Based on per-capita trends in Michigan, that would translate to about $10 million in lost handle, $775,000 in lost revenue and $65,000 in lost state taxes for Michigan in 2023.
Based on PlayUSA projections for Michigan sports betting, those numbers would mean just a 2.2% impact on handle and less than 1% revenue impact from Ohio’s launch. All in all, the expected impact is expected to be minimal, according to PlayMichigan projections.
Michigan sports betting reaching an early plateau, by no fault of Ohio
Ohio’s launch comes at a time that Michigan sports betting is beginning to level off.
After the summer months, Michigan sports betting handle was up about 10% from 2021, but September (-1%) and October (+1%) were much more flat. November and December numbers will complete the story for the year, but the previous few months are pointing to slowed growth in Michigan, and possibly even a plateau for the market.
Despite the minimal impact of Ohio’s launch, PlayUSA projects Michigan handle to drop 3% in 2023 to $4.6 billion down from about $4.8 billion in 2022.
The expected change from 2022 to 2023 is not uniform across months, however. While the projections indicate decreases in handle for the first seven months of the year, August-December 2023 are projected for single-digit percentage increases over 2022.
Michigan sports betting handle projected to see drops in January-March 2023
The relatively large expected drops for the first three months of 2023 are more a factor of per-capita handle and revenue in Michigan remaining below expectation. For 2022, per-capita handle is on pace for $476 which is quite low compared to similar markets.
For comparison, most healthy markets (apart from Pennsylvania at $554) peak well above $600. For example, smaller population states like Indiana ($655), Illinois ($767) and Iowa ($731) are all outpacing Michigan by a large margin. If the trend continues, it’s likely Michigan sports betting will stop seeing significant year-over-year growth.
Ohio sports betting set up for success
The GeoComply data confirms high betting interest in Ohio, which also has a higher population (11.7 million) than Michigan (10.0 million). The open model and coordinated launch on Jan. 1 should also set Ohio up for a strong start and potentially, even some poaching of Michigan bettors.
The Buckeye State is set to launch with a record number of online (and in-person) betting options on opening day.
The Ohio Casino Control Commission can issue a maximum of 25 Type A licenses for online sports betting companies. There are also provisions available that allow for further expansion if it would be incremental to Ohio’s economic benefit.
Similar to Michigan’s operator-friendly tax rate of 8.4%, Ohio issued a 10% industry tax rate for sports betting, making it an attractive landing spot for sportsbook companies.
There are 12 online sportsbooks approved currently in Ohio, with an anticipated 16-20 to be available at launch. By comparison, Michigan had 10 available online sportsbooks at launch. That was the most available for any state’s launch date thus far.
“Ohio is going to be one of the nation’s largest sports betting markets right away, even bigger in year one than neighbor and rival Michigan in its third year,” said Matt Schoch, senior content manager for Catena Media. “Ohio has a huge population, an engrained sports culture and the most access to sports betting of any state to date. Folks will have waited more than a year since the law was passed to place bets. But having each major operator launch together will make the opening even bigger, as it did in Michigan.”
Michigan sports bettors will have an opportunity to take advantage of this widespread launch as well. If an operator hasn’t launched in Michigan, but does launch in Ohio, players could cross the border to take advantage of unique launch promotional offers.
Ohio will have many of the sportsbooks Michigan bettors are familiar with such as FanDuel, DraftKings, BetMGM, Caesars and more. It also will include the likes of different brands like Bet365, Hard Rock, Betfred and Super Book, among others.
What will the Ohio launch mean in dollars?
Combined with the robust offerings on Day 1 and the timing, Ohio is primed for a quick start. In January, the NFL closes out its regular season and moves into the playoffs while the NBA, NHL and college basketball are in full swing.
PlayUSA is projecting Ohio to generate $583 million in sports betting handle in its first month, while Michigan is projected to attract $478 million in January 2023 bets.
In the following months, the Super Bowl and March Madness will take place, providing Ohio with a chance to have a strong first quarter. PlayUSA projects Ohio to skyrocket to $779 million in handle by March, when Michigan could see a drop to around $432 million.
Ohio is projected to generate $8 billion in handle in 2023. Michigan took nearly two years to hit that number.
So while Ohio won’t be a main reason for Michigan’s sports betting market cooling off in the early months of 2023, the Buckeye State will likely be trending in a very different direction than its northern neighbor.
Valerie Cross, Catena Senior Content Manager, contributed to this report. Photo illustrations by Jenn Montgomery, Catena Content Manager.