Arizona Sees Growth in Sportsbook Handle but Revenue Declines

report by J.P. Morgan analyst Joseph Greff, detailing the state’s sports wagering dynamics.

The total hold percentage for sportsbooks in Arizona was relatively modest, standing at 6.8%. This translated to gross revenue of $53.8 million before promotional deductions were factored in. However, operators saw substantial reductions in revenue due to increases in free play and other promotional allowances, which amounted to $30.2 million. Free play, tax-deductible for operators in Arizona, ed for 3.8% of the handle in October 2024, up from 3.5% during the same period in the previous year. Notably, promotional spending consumed 56% of total winnings.

DraftKings and FanDuel Lead the Market

Among Arizona’s sportsbooks, DraftKings emerged as the leader in total handle, processing $262.5 million in wagers. Despite this, the operator secured second place in revenue, generating $15.1 million, of which $8.5 million went toward promotions. FanDuel, on the other hand, reported a slightly lower handle of $252.5 million but outperformed DraftKings in revenue with $21.7 million, even after deducting $9.5 million in promotional expenses.

BetMGM secured third place with a handle of $99.5 million, resulting in $5.7 million in revenue. Promotions ed for $4.1 million of this figure. Caesars Sportsbook followed, handling $44.8 million in bets and recording $2 million in revenue after deducting $900,000 in promotional allowances.

Bet365 came in fifth, with $37.7 million in total bets and $2.8 million in winnings. However, the operator reinvested the entirety of its revenue back into promotional efforts. ESPN Bet reported $19.3 million in handle, generating $1 million in revenue, with $600,000 allocated to promotions. BetRivers saw a modest $7.2 million in handle, resulting in $600,000 in revenue and $100,000 in promotional spending.

Smaller Operators and Overall State Revenue

Unidentified operators collectively handled $67.7 million in bets, earning $4.8 million in revenue and dedicating $3.8 million to promotions.

In of state revenue, Arizona collected approximately $2.35 million in privilege fees from sports wagering in October 2024. While this figure reflects the ongoing growth of the sports betting market in the state, it also underscores the significant impact of promotional strategies on operators’ net earnings.

The October 2024 figures highlight a mixed outcome for Arizona’s sports betting industry. While increased wagering activity is a positive sign for market growth, the heavy reliance on promotions to attract bettors continues to cut into overall profitability for operators. This dynamic presents a challenge as sportsbooks navigate the balance between expanding their customer base and maintaining sustainable revenue streams.

Source:

”Arizona Department of Gaming Releases October Sports Betting Figures”, Arizona Department of Gaming Report. January 08, 2025.