We’ve become accustomed to headlines about legal online gambling states setting monthly revenue records. They’re so common as to have become repetitive.
However, you won’t see any such headlines for US online casinos this month. Essentially all* states with legal online casinos have seen daily average gross gaming revenue (DAGGR) drop from April to May. All our analysis uses DAGGR rather than monthly GGR to avoid illusory effects created by comparing longer months to shorter ones.
(* We say “essentially all” because Delaware has not reported its figures yet. However, its market is so tiny compared to the others that even if it bucks the trend, the effect will be a rounding error for the US as a whole.)
Of the big states, Michigan had the toughest month, with DAGGR down 6.9%. Pennsylvania and New Jersey saw smaller drops of 4.1% and 3.8%, respectively.
The good news is that the downturn isn’t a negative sign for the industry. Rather, it’s a normal, predictable, and healthy feature of stable online gambling markets.
Sports betting has powerful seasonal cycles based on those of the most popular sports for betting, like NFL football in the US. The seasonality of online casino gaming and poker are weaker, and their causes less obvious, but they do exist. As it is for sports betting, summer is the slow period.
There are two main reasons for this. Firstly, most online casinos come with an integrated sportsbook, so less sports betting means less crossover traffic. Secondly, people are out of the house more in the summer, and more competing forms of entertainment are available.
Other effects like new brand launches and the COVID-19 pandemic masked this effect in newer US states. It is, however, historically apparent in other markets.
US Online Gambling is Trending Towards Normalcy
The underperformance of Michigan relative to Pennsylvania and New Jersey might be more concerning. For a time, it looked like it was close to catching up with those other states, despite their head start.
Stepping back a little provides some perspective here. Despite a seemingly bad month, Michigan still enjoys a 34.3% year-over-year growth rate. That’s better than either New Jersey or Pennsylvania and similar to where it began 2022. Overall, it looks as if Michigan’s “poor” recent performance is simply the ongoing correction from an abnormally good month in February.
That does raise the question of how those other states are performing in year-over-year terms. Such comparisons are the best way to separate long-term growth from the sort of seasonal effects the industry is currently experiencing.
Both states, Pennsylvania especially, have seen their annual growth rate declining since the beginning of the year. If that trend continues, it could become worrisome. For now, however, it simply puts both states in the vicinity of 25% annual growth.
Not only is that a good number compared to most other industries, but it’s also in line with New Jersey’s growth from 2015 to 2018, which averaged almost exactly 25%.
That period presents what’s probably the most appropriate baseline to compare to. From late 2018 to early 2020, growth was driven by the arrival of new brands due to the appearance of legal US sports betting. From Q2 2020 on, that boom has been compounded by pandemic effects.
Now, it’s likely that we’re simply seeing the industry returning to a more normal and sustainable situation.
Michigan Online Gambling Revenue – May 2022
The grand total for Michigan online poker rooms and casinos in May was $127.4 million, down from $132.4 million in April despite having an extra day in the month.
Given the connection between sports betting and online casinos, one would expect the sports-first brands to expect a more severe summer downturn.
Sure enough, DraftKings (-11%), Barstool (-29%) and especially PointsBet (-60%) were among the brands to see the most significant drops in iGaming DAGGR in May. FanDuel Casino underperformed the market average as well, but only slightly, with a decline of 7.6%.
More balanced brands like BetMGM (-4.7%), BetRivers (-3.4%) and Golden Nugget (-4.5%) fared better than the market average. One result is that BetMGM’s market share expanded a whole percentage point to 38.7%. That’s its most dominant position since September 2021, when its sports-oriented rivals DraftKings and FanDuel began their seasonal comeback. If 2022 repeats the trends of 2021, BetMGM may see its share swell to more than 40% before the summer is over.
However, only three saw DAGGR increase. One of these is Eagle Casino & Sports, which, as a new brand, is still growing explosively. FireKeepers Casino (+3.2%) and Caesars (+6.8%) saw more modest gains.
Pennsylvania Online Gambling Revenue – May 2022
Pennsylvania online casinos brought in $133.9 million in May. Adding in $2.8 million produced by the poker rooms makes a total of $136.8 million for online gambling, down from $138.0 million in April.
It’s harder to judge the performance of individual brands in the Keystone State because so many important ones – including BetMGM and DraftKings – are lumped together on the Penn National/Hollywood Casino license. That license beat the market average, losing only 1.7% in DAGGR from April to May.
BetRivers (-10%), Caesars (-11%) and PlayLive! (-18%) took the worst of things. On the other hand, Unibet (+29%) and the soon-to-shut-down TwinSpires (+46%) bounced back by double-digit percentages after a bad month in April.
One thing Pennsylvania does allow insight into is the performance of slots compared to table games. In previous years, slots grew in relative popularity over the summer, and that appears to be happening again. They accounted for 74.3% of May revenue, up from 73.6% in April and a low of 71.9% in January. For comparison, the high in 2021 was 78.3% in August.
This, too, is likely related to sports betting. There has been other evidence in PA numbers to suggest that table games, particularly blackjack, are disproportionately popular with sports bettors compared to pure casino gamers.
New Jersey Online Gambling Revenue – May 2022
Total revenue for New Jersey online gambling was $136.0 million in May, down only slightly from $136.9 million in April. Casino gaming accounted for $133.7 million, with poker contributing the other $2.7 million.
One story in the Garden State has been the growth of the new Bally’s license. This comprises its own Bally Casino brand, plus PointsBet Casino and, most recently, Virgin Casino. Together, they increased DAGGR by 9.5% in May, exceeding $3 million in monthly revenue for the first time.
Even so, Bally remains the second-smallest license in the state. The smallest, Ocean Resort, also had a good month, up 27%.
Golden Nugget (-12%), Hard Rock (-14%), and Tropicana (-17%) all saw double-digit percentage drops. The latter may still be hurting a little from the loss of Virgin Casino to the Bally’s AC license.
West Virginia Online Gambling Revenue – May 2022
West Virginia online casinos saw DAGGR drop 4.3% in May, similar to NJ and PA. Total revenue for the month was approximately $8.5 million, though this is an estimate since the Mountaineer State reports revenue weekly rather than monthly.
Mountaineer Casino had the worst month of the three licenses, down 12.5%. Its skins are Caesars and BetRivers.
Conversely, Hollywood Casino at Charles Town was the only license to see an increase in DAGGR, albeit of just 1.8%. That’s somewhat surprising given the time of year since its skins are the more sports-focused ones: DraftKings and PointsBet.
Greenbrier, the biggest of the three, performed closer to the state average, dropping 5.4%.
Connecticut online gambling revenue – May 2022
Connecticut had the worst month among the five states to report revenue. Combined DAGGR for its two license-holders dropped 11.1%. The monthly total was $20.9 million compared to $22.8 million in April.
The big story in the Nutmeg State has been the rate at which the DraftKings/Foxwoods partnership has been incinerating money to maintain its market leader position over FanDuel/Mohegan.
After slowing down that spending and seeing the market sliding towards parity, it boosted daily average promotional expenditures by 63% in May. That has paid off in the sense that it got back to earning about 60% of the gross revenue in the state. To do so, however, it spent over $10 million more than it won and outspent Mohegan by a factor of 26.
It’s a microcosm of the company’s national strategy, which has investors wondering whether its customers will prove loyal enough for this extravagant spending to pay dividends when the time comes to dial it back.
Delaware Online Gambling Revenue – May 2022
Delaware has yet to report its May online casino revenue, but we’ll update with its figures when they come in.
State Totals & Growth Rates
Here’s how the six online gambling states stacked up in May.
| State | GGR - May 2022 | Monthly Change (normalized) | Annual Change |
|---|---|---|---|
| Pennsylvania | $136,752,806 | -4.1% | +20.2% |
| New Jersey | $136,016,462 | -3.8% | +25.7% |
| Michigan | $127,385,503 | -6.9% | +34.3% |
| Connecticut | $20,914,593 | -11.1% | N/A |
| West Virginia | $8,507,074 | -4.3% | +80.5% |
| Delaware | $1,098,941 | -13.0% | +20.7% |
Notes
- Where possible, figures represent gross gaming revenue without promotional deductions. However, Pennsylvania provides only adjusted revenue for table games and poker; PA numbers are, therefore, gross slots revenue plus adjusted revenue for tables and poker.
- West Virginia reports numbers weekly, so the monthly numbers are estimates which assume that revenue for partial weeks is spread evenly between days.
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