To reference a sport US Bets colleague Eric Raskin has forgotten more about than I know, if the 2021 sports betting year in the United States was a boxing match between the house and the public, the house was well on its way to earning a unanimous decision entering the month of December.
The scorecards would have shown three 10-8 rounds representing the months the house posted a hold of 9% or better, two full percentage points above the industry standard. The summer knockdowns in June and July preceded a vicious 11th-round uppercut in November, when operators posted a 9.8% hold on gross gaming revenue that led to a post-PASPA record monthly windfall of nearly $725 million and resulted in nearly $100 million in state taxes nationwide.
Sure, the public got some shots across. It made the house wobble a little in February and landed a solid 1-2 in October in dropping the hold below 6%, but nowhere during the exponential year-long rise of the industry in terms of acceptance and increased wagering did Joe Public catch his opponent flush.
Bettors regained their bearings and closed out the year with a flourish, sending the house spinning to the canvas and holding it to a year-low 5.1% hold on gross gaming revenue. The downward swing of more than 4.5 percentage points from November represented the third-largest month-over-month decline in the post-PASPA era that started in June 2018, and it was the most impactful one given the $14.7 billion wagered in the final two months of the year.
|Months||Higher Month Win Rate||Lower Month Win Rate||Difference in Percentage Points|
|December 2018-January 2019||8.3%||4.2%||4.1|
The two swings that rank above November and December of 2021 came in 2018, when state-by-state sports wagering was taking its first steps. Large fluctuations would be expected in such instances given the small number of legal jurisdictions and how a large state such as Nevada or New Jersey could create an outsized impact on the overall number.
The late flurry was not enough to change the outcome on the scorecards — the house finished the year with a 7.5% hold, the second straight year the GGR win rate went higher after an initial year-over-year decline from 2018 to 2019. The hold has been 7% or higher at the end of each of the last four years, with the 2022 rematch looking to again increase in both intensity and handle.
It keeps coming back to football and parlays
National #SportsBetting numbers, 2021 note:
Q4 accounted for the following percentages of overall 2021 numbers:
Handle: 38.6% ($22.28 billion)
GGR: 35.6% ($1.55 billion) 6.94% hold
AGR: 34.1% ($1.21 billion) 5.42% hold
Taxes: 33.9% ($190.6 million)#GamblingTwitter
— Chris Altruda (@AlTruda73) March 8, 2022
It has been repeated to the point of overkill, but once more, with feeling: The impact of the NFL embracing legal sports wagering by making sportsbooks league partners and approved operators cannot be understated in terms of the growth the industry enjoyed in 2021. The $22.3 billion wagered in the final three months of the year exceeded the handle for the entirety of the pandemic-ravaged 2020 ($21.5 billion). It was also more than the handle of 2018 and 2019 combined.
Football wagering and parlay wagering were key reasons the national win rate soared in November and plunged in December. A four-state snapshot of large markets — New Jersey, Nevada, Illinois, and Colorado — bears this out. The combined November college and pro football handle from the quartet was more than $1.3 billion, and operators claimed $118.6 million in gross revenue for a win rate of 8.9%. December football handle tailed off nearly 10% to just shy of $1.2 billion, but gross revenue dropped 63% month-over-month to $43.9 million. Colorado was the only state not to have a drop of at least 50%, and the Boulder State was close at 45%. Football revenue dropped by more than 80% in New Jersey and over 75% in Illinois.
With wagering on NFL games comes parlay wagering that includes NFL games. While parlay bets continue to be an all-important cash cow for operators when stacked up against the overall sports betting win rate, December showed operators are not invincible.
Excluding Nevada from the previous group since parlay cards in the Silver State do not generate notable handle, Illinois, Colorado, and New Jersey combined to reap $132.1 million in revenue from parlay handle totaling $513.1 million, translating to a staggering win rate of 25.7%. In December, parlay handle ticked up 1% to $518.2 million, but revenue backslid 58.6% to $54.6 million.
Granted, the three states still posted a healthy combined win rate of 10.5%, but there is a notable difference in operators collecting more than $1 out of every $4 wagered to barely more than $1 out of every $10. All three states had fall-offs of more than 50% from November to December, with the Garden State taking a 60.3% hit.
Putting a bow on 2021 and peeking at 2022
Year-over-year comparisons from 2020 to 2021 should have been overwhelmingly positive given how the COVID-19 pandemic wreaked havoc in 2020. In some respects, 2021 was what 2020 should have been. After closing 2018 with just seven states accepting wagers, that number of jurisdictions has now surpassed the halfway mark when including Washington, D.C.
|Year||National Handle||National Gross Gaming Revenue||National Adjusted Gross Revenue|
By the end of 2021, six of the 13 most populated states not only had legal sports betting but also had robust mobile wagering markets. That has helped national handle soar on a year-over-year basis, with the $57.2 billion handle for 2021 more than double that of 2020 and greater than four times the $13.1 billion in legal wagers placed in 2019.
The new year has already brought a bright start, highlighted by New York‘s successful entry into the mobile wagering landscape and quick ascent, setting the state handle and tax receipts standard everyone is now chasing. While it may not enter the picture in 2022, Ohio is charting its course post-legalization, and the Buckeye State will try to keep up with what has been an overdelivering Rust Belt region in terms of performance from Michigan and Indiana.
While Louisiana may be mid-tier in terms of sports betting handle, its quick adaptation of mobile wagering could result in other smaller southern states — think Mississippi and Arkansas — doing likewise to keep up. And you can be sure Texas is also watching the Pelican State ahead of its 2023 legislative session, trying to determine if there is an appetite for sports betting legislation to move forward following its introduction in 2021.