Michigan Sportsbooks Retain More Revenue from Dwindling Wagering Handle in June

Between January 2022 and now, 10 more states have legalized online sports betting, bringing the total tally to 28 states. The effect of the proliferation of legal mobile sportsbooks on the first few states to launch online wagering is yet unknown. But there’s no doubt that the presence of licensed sportsbooks in more states would reduce betting activities in pioneer jurisdictions.

This effect may well be at work in Michigan as sports betting handle is on a three-month decline streak. June saw the state drop to its lowest sports betting handle in 10 months. Surprisingly, though, during this period, revenue has remained steady, relative to handle stats.

Michigan sportsbooks could only generate a total betting handle worth $235.9 million in June. This figure represents a 19.3% year-over-year decline, and an even worse 22.7% drop from May 2023. It was also the first month that Michigan wagering handle was less than $300 million since August 2022.

Albeit in a stunning turn of events, sportsbooks managed to generate a sizable revenue from the poor run of betting handle. Compared to last year’s revenue of $15.4 million, June 2023 ended with $18.3 million in gross online betting receipts. This indicates a 13.7% increase year-over-year but is barely half of the sports betting revenue of $35.2 million recorded in May 2023.

Funny enough, online betting revenue from the past six months was just shy of $200 million. The half-year stats revealed an overall revenue of $190.7 million in 2023, a 14% growth from the same period in 2022 when Michigan sportsbooks pooled $167.3 million.

Unfortunately, the same cannot be said for sports betting handle. In the first six months of 2022, the state’s wagering handle stood at $2.32 billion. Now, it’s down to $2.07 billion, an 11% on a year-over-year comparison. This is the seventh consecutive month where online handle has been lower than the month prior.

Combined, Michigan iGaming and sports betting operators, commercial and tribal alike, have reported $169.3 million in gross receipts. Compared to May 2023, this overall figure is evidence of an 8.9% drop.

While the news is that, independently, Michigan online sports betting operators pooled $18.3 million, the addition of retail numbers dragged that revenue to $17.9 million. Thanks to a huge payout from MotorCity, retail sportsbooks across the state suffered a loss of about $378K, while the operator itself was set back about $700k. This was the second betting loss recorded already in 2023.

However, this is not to say that overall numbers could have been significantly better, as revenue would have still been in the same range. Nevertheless, it may be proof that retail sportsbooks are attracting more significant bets. Besides the weather that’s favorable for an outdoor experience, it just makes sense that players are more confident when playing high-stakes at brick-and-mortar operators.

That said, betting hold is down to 7.6% from 11.8% in May 2023. From a year-to-date perspective, online sportsbooks have maintained a 9.2% hold, compared to a 7.2% hold in the first half of 2022. Michigan sportsbooks also paid $557K to the state authorities and $304K to local entities as sports betting taxes for the outgone month.

A frequently overlooked metric with sports betting is the adjusted revenue, indicating the net receipts after deducting losses from promos and bonuses. By June 2022, online sportsbooks in the state had an adjusted gross revenue of $74.1 million, $93.2 million less the total receipts.

This year, the adjusted revenue is currently $113.5 million, with a difference of $77.2 million. These figures point to a possible reduction in bonuses to strengthen betting holds among online sportsbooks. And from the available outlook for June, many of them seemed to have fared well.

FanDuel Sportsbook MI, for example, posted a hold of 13.7% and a revenue of $10.2 million, accounting for over half of the total gross receipts from online sports betting in the state. Unfortunately, other big names could not pull as much weight. BetMGM Sportsbook couldn’t continue its streak of doubt-digit betting holds for a fourth consecutive month, settling for a revenue of $2.9 million.

Interestingly, PointsBet showed some prospect ahead of its acquisition, topping a hold of 8%, while Caesars Sportsbook MI could only manage less than a 6% hold, failing to have crossed a 7% since the end of 2022.