Analyzing The Early Sports Betting Returns In Virginia

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Virginia, which took its first regulated sports wagers on Jan. 21, is poised when May figures are released to set the record for the fastest state to reach $1 billion in betting handle.

There are an assortment of asterisks making this possible, including when Virginia launched (in 2021, when legal sports betting awareness was far higher than it had been in states that launched in 2018 or 2019) and how it launched (with online wagering first, as compared to other states that banked mediocre retail numbers initially).

Still, Virginia took in $865.2 million in bets in its first three-plus months and is a lock to surpass the billion-dollar mark in its fifth month, breaking a record currently held by Tennessee, which hit 10 digits in its sixth month of regulated action.

In advance of that milestone being announced, this seems as reasonable a time as any to check in on the early returns in Old Dominion, from the perspective of the sportsbook operators, the state, and the bettors.

Cavaliers vs. Wolverines

In a little more than four months, seven mobile sportsbooks have launched in Virginia: FanDuel, DraftKings, BetRivers, BetMGM, William Hill, WynnBET, and most recently, Unibet. At least three more are expected to arrive in the next few months, including bet365 and PointsBet, which has its “prelaunch” website up.

The most logical state with which to compare Virginia is Michigan, as the two states launched online sports betting almost simultaneously in January. The comparison is not perfect, however, because Michigan had been taking retail sports wagers for nearly a year at that time.

Still, the states are similar in size, with Michigan checking in with a population of just a shade over 10 million people and Virginia home to just over 8.6 million. So it’s far from an apples-to-oranges comp. Call it red apples to green apples.

Here’s a look at how the two states stack up in terms of total sports betting handle, revenue, and taxes going to the state for the months of January-April:

  2021 Total Handle Revenue Tax Revenue
Virginia $865.2 million $61.8 million $3.2 million
Michigan $1.11 billion $59.7 million $1.4 million

Virginia’s population is 85.7% of Michigan’s, but its betting handle is only 77.9% of Michigan’s over these four months. So is sports gambling not as popular in Virginia?

Given that Michigan offers retail betting as well and was able to take bets that way for 20 days in January before Virginia opened up shop, it’s probably best to remove January from this equation. From only February through April, Virginia’s betting handle was 84.1% of Michigan’s, a number almost directly in line with their respective populations.

And as the table above shows, sportsbook revenue is slightly higher in Virginia, and the higher 15% tax rate in Virginia means more money going into the state coffers — although given how much these mobile sportsbooks tend to give back in promos to attract customers in their early months, the state has still collected a relative pittance so far.

The leading sportsbook in Virginia through the first four months, with 53% of the betting marketshare, is FanDuel. It presented a perfect example of that promotional jockeying we see with its Virginia-customers-only “Spread the Love” special for a Jan. 31 Washington Wizards vs. Brooklyn Nets game. The line was inflated all the way to Wizards +149 points — a can’t-lose bet — and FanDuel paid out $1.5 million total to customers on it.

FanDuel launched three days before rival DraftKings Sportsbook. Does the FanDuel team believe that was a key to its early success in Virginia?

“While launching first was important, and we’re grateful to the state for that opportunity,” FanDuel Group CMO Mike Raffensperger told US Bets, “our strong partnership with the Washington Football Team continues to drive our success. … Sports fans across the state have embraced the FanDuel Sportsbook, and our success has far exceeded our expectations.”

A bettor and a bill backer weigh in

Mark Sickles, a sponsor of the sports wagering bill in the Virginia House of Delegates, sees pros and cons in the early returns for Virginia sports betting.

“I’m a little disappointed in the Virginia state share of the revenues. I was hoping for more than that,” Sickles said Wednesday. “But as far as the popularity of it, I think we are succeeding in offering a regulated alternative to illegal sports betting. I think people enjoy using these apps. They’re popular, as we thought they would be.

“Yes, we’re out there encouraging people to gamble — but we’ve been doing that for years with our lottery. Our lottery is extraordinarily profitable. It’s much more profitable than this sports betting business, by orders of magnitude. But the fact that most of the money goes back to the players is something that’s appealing to the public.”

US Bets also spoke to a Virginia-based sports bettor who requested anonymity. He’s not a professional bettor, but he takes it fairly seriously as a hobby and used offshore sites in the past, prior to the launch of legalized betting in his home state.

The bettor has funded accounts on five of the state’s seven books and says he has engaged in a roughly even mix of straightforward betting and promo chasing (accompanied by the cross-site arbitrage opportunities promos and boosts sometimes present). He says he’s noticed the volume of “gimme” promos — such as that FanDuel Spread the Love offer — has decreased from the initial weeks after launch, but that other promotions haven’t noticeably dropped off.

“The promos tend to be centered around events, so every site has had all kinds of promos recently for the NBA playoffs and the NHL playoffs,” the bettor said. “There’s still a significant volume of 20% profit boosts, and 25% live in-game bet boosts. BetMGM offers a parlay boost every day, and DraftKings has had a bet-$25-get-a-$5-free-bet deal every day of the NBA playoffs.”

As for the overall customer experience as a bettor in Virginia, “it varies wildly,” he said. “User interfaces vary wildly. It’s interesting — if I bet a parlay, only DraftKings and MGM will tell me with a green light or red light, or a check mark, if I’ve won or lost the individual games in my parlay. Those kind of things seem so basic.

“How do I see my transaction history? Which bets are open and which are not? How easy is it to find the markets I’m looking for? Every single site varies. I find the inconsistencies to be extraordinarily frustrating. And the things you can bet on vary. DraftKings is the only one that would offer me props on next to score in a hockey game. FanDuel’s the only one for something else.

“I tend to use DraftKings and William Hill the most, probably because I find them the easiest to navigate. Almost all of my in-game betting is done on those apps for that reason. I use them even though I know that I may be giving up a couple of points sometimes at other sportsbooks.”

The bettor noted that he found the ease of deposit at the regulated sites to be “no problem,” and though he hasn’t made withdrawals yet, he knows others who have — including one old-school acquaintance who receives physical checks in the mail — and found the experience to be smooth.

Ad nauseam

As any resident of any legal sports betting state knows — provided said resident watches live television, listens to the radio, or drives past billboards — one downside to the introduction of regulated sports betting is the accompanying advertising.

This is already a major topic of conversation in Virginia.

“If you watch live sports, every other commercial on television is for one of the sites,” the anonymous Virginia bettor told US Bets. “They sponsor every single sporting event that you see now on the rink or on the court. The billboards on the sides of the highways in Virginia are all gambling related. You cannot escape the advertising.”

At an April 21 Lottery Board meeting, a participant expressed concerns about the volume of advertising and wondered whether state regulations could curtail that.

“The regulations do not speak to the amount of marketing that they’re allowed to do,” replied Virginia Lottery Deputy Director of Gaming Compliance Gina Smith. “However, there is something in there that if we believe an operator is saturating the market, we can address that. At this point in time, I believe it’s really early in the process, but we are keeping an eye on it.

“It’s new to the commonwealth — everyone’s trying to get into the game and advertise their product. But the director [Kevin Hall] and I have had conversations about it, and we are watching the amount of advertising that is being done. We’re also working with the responsible gaming people, just to make sure it has the proper messaging on it.”

Sickles says his constituents have shared negative feedback with him as well.

“The comments that I get personally about sports betting are mostly about overkill with advertising,” he said. “And what I don’t know is whether that will lessen over time when the markets have been established. For now, it’s ubiquitous. But I’m a soccer fan, so I’m used to seeing that, where Betway is on the jerseys of some of the most famous soccer teams in Europe. So I’ve seen it in European sports for a long time. We’ll see how it goes here. I think it’s going to be part of our lifestyle going forward.

“The broadcast television industry, and the billboard industry, I wonder if they had any idea the windfall that was coming their way when [sports betting legislation] passed. But they’re going to be among the strongest supporters of the industry as we keep going.”

Photo by Ken Ruinard / USA Today Sports

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