Across six legal states, US online casinos produced over a half-billion in gross gaming revenue in January. However, they came up 4.8% short of the Bonus forecast for the month. That may suggest the industry’s growth is slowing down even more than expected.
Full-year revenue rose 38% in 2022. Bonus projected that we’d see this slow to 21% in 2023. However, year-over-year growth in the monthly total for January is already just over 21%. If the growth rate continues to fall, 2023 may prove to be a very slow year indeed.
All told, gross gaming revenue for regulated online casinos and poker rooms in the US amounted to $510,085,989 in Jan. 2023. That’s actually a slight loss compared to $512,822,343 in Dec. 2022. By contrast, monthly growth from December to January last year was just over 2%.
That said, it’s too early to write off 2023. March is typically the biggest month of H1, so how much of a bounce we see then will tell us more about how the year is shaping up.
Online Gambling Revenue Summaries
An All-Time Low in Total Market Growth
Annual growth for the total US market hovered near 30% for much of the second half of 2022. Strong growth in Michigan and West Virginia, plus the addition of Connecticut, offset weak performance in New Jersey. Pennsylvania was also showing signs of stabilizing its growth towards the end of the year.
In December, growth slowed to less than 24.6%, the lowest since regulated online gambling began expanding to new states in 2019. Month-to-month volatility on the order of a few percentage points has been normal, so we might have hoped for a recovery to around 27% or 28%. Instead, annual growth dropped even further to 21.4%.
Almost every state saw growth slow down from December to January, with Michigan being the lone exception.
Part of the explanation for the slowdown may be a reduction in marketing expenditures by major operators. We have concrete evidence of this in the case of DraftKings, looking at its promotional spending in Connecticut. However, other operators have also indicated to investors that they are starting to emphasize profitability over customer acquisition.
Hence, a slow start to the year may not imply bad news for bottom lines, provided there’s a corresponding reduction in expenditures.
Pennsylvania Online Gambling Revenue – Jan 2023
Pennsylvania online gambling sites saw a slight downturn in January, to $160 million in total revenue from $167 million in December. Revenue from slots dropped 5.2% month-over-month, while table games saw a smaller decrease of 0.9%. Online poker revenue increased by 10%, but that wasn’t enough to offset the losses in the casino vertical.
It’s often difficult to say which operators are responsible for gains and losses in the Keystone State. That’s because several of the largest ones – including DraftKings and BetMGM – share the same license held by Penn National. That license saw a 10% drop in total revenue for the month, so it seems that the bigger operators had a bad month. On the other hand, Valley Forge – home to FanDuel Casino – was up 5%.
Michigan Online Gambling Revenue – Jan 2023
Michigan online casinos managed a slight improvement in revenue, from $153 million in December to $154 million in January. That put the annual growth rate at 26.8% in January compared to 25.5% in December, making Michigan the only state to see growth accelerate month-over-month.
Smaller operators in the state were responsible for driving the growth. The combined market share for the top three Michigan operators (BetMGM, DraftKings and FanDuel) has never dropped below two-thirds. It hit a low of 67.2% in August before climbing to 71.5% by November but is on the decline again at 70.3% for January.
Play Gun Lake rebounded strongly after its revenue plummeted in December due to player winnings. The other tribal operators also saw revenue rise, including gains of 16% for Four Winds and 13% for FireKeepers.
However, PokerStars was the big winner of the month, up 65%. Michigan doesn’t separate online poker and casino revenue, but we have to assume this is due to the effects of traffic sharing between its Michigan and New Jersey poker rooms.
New Jersey Online Gambling Revenue – Jan 2023
New Jersey online casinos produced $150 million in gross revenue in January, a 0.6% increase from December and good enough to set a state record. Online poker rooms did considerably better, up 24.8%, though their contribution to the state total remained small at just $2.7 million.
The jump in NJ online poker revenue is due to PokerStars, again because it has united its NJ players with those in Michigan. Its poker revenue jumped 76%, while the other two operators saw smaller increases.
Meanwhile, the race to be the top license in the state has become very close. The one-time market leader, Golden Nugget, increased its revenue by 7.4% to reclaim second place from Resorts. However, it didn’t quite catch up with Borgata, which retained the top spot despite a decline of 6.7%.
Those three licenses are now effectively deadlocked. Here’s what their revenue looked like in January:
- Borgata (including BetMGM and others): $40,798,884
- Golden Nugget (including Stardust, BetRivers, and others): $40,596,496
- Resorts (including DraftKings, PokerStars, and others): $40,222,698
With less than a 1% difference separating the three from one another, it’s anyone’s guess who will be the market leader in February.
Connecticut Online Gambling Revenue – Jan 2023
Connecticut’s two online casinos saw their combined revenue increase 6.6% in January, exceeding $30 million for the first time. That also made the Nutmeg State the closest of the six to matching Bonus’s forecast, coming up just 1.1% shy of our projection.
DraftKings’s promotional spending fell off a cliff, from $22.2 million in December to just $3.5 million in January. Its market share only slipped from 59.0% to 56.4%, but a more significant drop may be coming. In the past, changes in its market share have seemed to lag changes in promotional spending by about a month.
Despite the reduction in promotions, even DraftKings was in the black in monthly growth, up 1.9%. Naturally, Mohegan fared the better of the two, up 13.2%. Both operators now seem to be calibrating their promotional spending to equal the tax-deductible monthly maximum, so it will be interesting to see how they fare when on equal promotional footing.
West Virginia Online Gambling Revenue – Jan 2023
West Virginia online casino revenue dropped 3% in January to $11.8 million. In annual terms, its growth rate is now 55%, still the highest of any state. Statewide revenue exceeded $10 million for the first time in September 2022 and hasn’t dropped below that threshold since.
Here, the story was a little different from other states in that the largest license was the only one to see revenue growth. The Greenbrier, which hosts FanDuel and BetMGM, enjoyed a 6.0% increase in January. Conversely, the Mountaineer license (Caesars and BetRivers) dropped 9.7%, and Charles Town (DraftKings and Pointsbet) was down 12.3%.
Delaware Online Gambling Revenue – Jan 2023
Delaware’s lottery-operated online casinos produced $1,189,863 in gross revenue in January.
Delaware has always been the smallest of the iGaming states and holds the dubious honor of being the only one to post a negative year-over-year growth figure for a single month in 2022, at -0.9% in November. It has improved to 6.1% annual growth for January but is still the slowest-growing of the six states.
It’s also currently the furthest off from our forecast so far, coming up 15% shy of Bonus’s revenue projection for the month.
US Online Gambling Revenue Summary Table
Here are each state’s monthly totals and growth rates in a single table.
|State||GGR - Jan 2023||Monthly Change||Annual Change|
- West Virginia reports revenue weekly, not monthly. Its monthly totals are an estimate, using the assumption that revenue for partial weeks is distributed evenly between the seven days.
- Pennsylvania only reports adjusted revenue (gross revenue, less promotional spending). Bonus calculates gross slots revenue by subtracting payouts from coin in, but no such data is available for table games and poker. Therefore, actual gross revenue is probably somewhat higher than what we report.