It hasn’t taken long for Arizona to leave its mark on the legal United States sports betting market, and on Friday, the state reported its numbers for its first two months of operations. Arizona launched sportsbooks and mobile betting applications on September 9, 2021, and the state quickly began to see significant interest and financial success. With $486 million reported in total wagers in October, Arizona’s first full month of sports betting was the best on record in the post-PASPA era, beating Nevada’s previous record of $286.5 million in June 2018.
Arizona Sports Betting Volume
With over $777 million in total sports bets placed in September and October, Arizona quickly became a top ten market in the nation once it launched its online market. When November numbers are reported, Arizona is expected to quickly become the fastest state to reach $1 billion in total sports betting handle. Arizona also beat out every other state to launch operations in 2021 in terms of debut volume, although we are still waiting on numbers from Maryland’s December launch.
Arizona reported $486 million in total sports bets placed in October, beating out September’s total of $291 million. October was a whole month of sports betting for the state, so seeing the volume surpass September wasn’t necessarily surprising. However, October beat September on a per-day basis with $15.6 million in sports bets vs. $13.2 million per day in September. Arizona’s gross gaming revenue of $36.3 million in October was the fifth-most in the United States for the month.
Tax Revenue Gradually Increases
While September was a very successful debut month for Arizona, some may have been surprised to see that the state brought in essentially no tax revenue. Arizona operators handed out an immense amount of free bet promotions and bonuses in September to boost customer acquisition at the start of the NFL season. In October, promotional money decreased, which led to an almost 25-times increase in adjusted revenue to $10.3 million and over $1 million in tax receipts.
Arizona collected over $14 million from sportsbooks and daily fantasy operators in licensing fees to open operations in the state. There are now nine sportsbooks that have launched in the state. In October, DraftKings dominated the competition with $152 million in total sports bets placed, representing over 30% of the total market. However, BetMGM’s $2.8 million in revenue beat out DraftKings’ $2.5 million despite BetMGM having just $92 million in total wagers, leaving it with a 3% hold rate compared to just 1.6% for DraftKings.
FanDuel also had substantial success in October, with $116 million in total wagers representing a 23.8% market share. However, like most other sportsbooks in the new market, FanDuel struggled to generate revenue. FanDuel brought in just $2.3 million on a 1.9% hold rate. For reference, FanDuel had a hold rate in the high teens in many states. However, in a new market in one of the largest states by population to legalize sports betting to date, FanDuel joined the party in terms of handing out large amounts of promotions and bonuses to new customers. As the Arizona market continues to mature, operators like FanDuel and DraftKings will continue to see substantial market shares and increase their revenue as promotions are less common.