In just a few weeks the US online betting and iGaming market will have been live for four years with 27 states and rising opting to regulate sports betting and 6 opening their doors to casino.
According the American Gaming Association, bricks and mortar and online-mobile businesses generated $53 billion in revenues in 2021, with Q1 2022 setting a new record of $14.35bn. Three of the 34 states set quarterly records, including Arkansas recording $147.4m, Florida, $182m and New York $996.6m.
Much has changed in four years with opportunities exploding across the board – including Ontario, Canada’s most populated province – regulating in April this year, however many US states are still deciphering how to strike the prefect balance between a sustainable tax regime and a competitive market. Equally, brands are grappling with the most sustainable ways to acquire and retain customers and provide them with the best experience, with big names struggling to balance marketing spend with bottom line profitability.
At BonusFinder we have created the Bonus Index to track regulated US States’ and Canadian Provinces’ quarterly performance, and how favourable each one is for consumers, something no other index monitors. We achieve this by using a wide variety of factors within all current and future regulated sports betting and casino states and provinces. This includes number of licences and licensees, and average bonus offerings across all licensed brands to calculate an overall Bonus Index score. By focusing on the consumer experience and competition among operators to attract those consumers we can easily identify which states will be the long-term winners.
The results in the last year have been fascinating and, with more states and provinces regulating, the race is on to secure a top spot and maintain that momentum in the long term.
Ontario vs Canada vs New York
The most significant news stories of 2022 so far have been Ontario and New York opening, both vying to become the biggest gambling markets North America – at least while California gets its political ducks in a row – but both with differing approaches on how to manage regulation, taxation and welcome/bonus offers.
In November our Index predicted that Ontario would become the most attractive iGaming market in North America for both players and brands, surpassing all its US online counterparts.
Its combination of a 15m adult population, strong sportsbook and casino player volumes, an estimated 70+ brands looking to be granted licences, all within a competitive market and battling for players by offering appealing casino bonus of approx. $866 and an estimated sportsbook bonus of $395, meant it would top the rankings… if all went well.
With no official revenue figures announced from the regulator to this point this is difficult to measure. What we do know, however, is there are fewer operators live than expected and, more evidently, if we look at comparative Bonus Index figures, Ontario’s online marketing rules are potentially seeing players not being offered competitive enough bonuses and diverting their deposits to other, potentially unregulated sources.
The potential blocker here are measures preventing third-party sites from promoting bonuses and only allowing bonuses to appear on licensed operator websites. This means that Ontarians cannot compare or ‘shop’ from a selection of offers to determine which is the best for their budget, playing style or personal preferences.
From a predicted number one position in the Bonus Index in November 2021, Ontario has fallen to 17th to May 2022. This is in stark contrast to the upcoming regulated states of Maryland and Ohio, new entries in first and second place respectively and several rungs above seventh placed New York, due to more expected licences and a lower level of taxation which will enable operators to offer players higher but equally more sustainable welcome offers.
Pennsylvania, one of the first states to regulate both online sports betting and iGaming, has suffered a similar fate in recent months dropping from a top five place to just above Ontario in 16th due again to a limited number of licensees and lower welcome offers as a result of higher taxation thus presenting players with an inferior offering than many other states.
We do believe, however that Ontario will bounce back benefiting from offering both casino and sports betting and a strong player appetite for both verticals, while the entry of more licensed brands in the coming months should see it rise up the rankings, increasing competition and consumer choice and the ability to offer local players more attractive bonuses.
New York brands pull back on inflated bonuses
North American neighbour New York, meanwhile, was previously hailed as the shining light of the US online betting market with 20m passionate sports fans and higher than average levels of disposable income.
For a time, it hit record revenues, but the last quarter has seen it remain in seventh in the BonusFinder Index with operators publishing large losses, slashing marketing spend and mind-blowing initial welcome offers and player volumes falling as a consequence.
The reasons for its temporary demise and its lower Index ranking are clear: it has the country’s highest tax rate with Caesars losing $500m in Q1 alone and Bally Bet not even launching citing an “insane” climate; its limited number of licensees has meant for a less than competitive market with fewer options for consumers; no regulated iGaming has meant smaller states have risen above it in the Index; while cutbacks in marketing spend – from matched launch bonuses of $3,000+ that artificially inflated revenues – have seen brands significantly reduce offers making it less competitive than neighbouring states.
The States of play
Overall, more states have slipped down (11) the BonusFinder Index rankings than have risen (8) compared to the previous quarter indicating that brands are either severely cutting back or more likely ‘recalibrating’ their marketing spend and, crucially their bonusing strategies which previously saw the highest regulated bonuses globally. Those states that have remained in the same ranking position as last quarter have kept their bonuses at similar or flat rates.
Of the forthcoming regulating states including Kansas, Ohio, Maryland, Minnesota and North Carolina, the BonusFinder Index forecasts Maryland and Ohio sports betting apps as the top two highest performing for brands and the most appealing for players.
Kansas sports betting apps were the first to launch in September 2022, but of the new markets they are the most regulated. In an ideal world Ohio and Maryland sports betting could launch almost simultaneously, however Maryland rule makers appear more hesitant and Ohio has a seemingly firmer date with January 2023 pencilled in for launch with as many as 46 sports betting licences. These brands will also be granted the advantageous opportunity to sign customers in the run up to regulation, and this could prove particularly beneficial with the ability to market to players during the start of the NFL season in September, NHL season in October and the soccer World Cup in November when the US face off against England, Iran and Wales in the group stages. Ohio also has the added advantage of almost twice the adult population of Maryland as well as two major NFL franchises in the Bengals and Browns with Cleveland, Cincinnati, and Columbus home to major league professional sports teams in baseball, basketball, hockey, and soccer.
With that in mind it could be some time until states such as New York come back to form with such potential from other states on the horizon.
In summary we expect Q3 and Q4 will see the continuing and broader state-wide realignment of marketing and bonus strategies and the first signs the US market is reaching its first stage of early maturity, while a boost from new licensees in Ontario will likely see it climb higher in the Index. However, this may alert other provinces that less stringent marketing rules could arguably be more beneficial for consumers immediately from launch and not post regulation.
