Pennsylvania’s February Supports Notion of Sports Betting Cool Down

The US legal sports betting industry was in the midst of a red-hot streak throughout the winter with record handles a theme among participating states. But then the calendar switched to February and with the culmination of the NFL season and only 28 days for which sportsbooks could do business, an inevitable cooling off for the industry was due.

Handles from participating legal sports betting states have been trickling in and so far, have shown a month-over-month drop from January, when the NFL playoffs were in full swing and the NBA and NHL were playing meaningful games. While Pennsylvania's February drop is eye-opening, those in charge of the Keystone State's legal sports betting platform aren't ready to push the panic button just yet.

“With just 28 days and a schedule with one NFL game, even if that game is the Super Bowl, a pullback from January to February is expected,” said Dustin Gouker, lead analyst for PlayPennsylvania.com. “Pennsylvania remains one of the strongest markets in the US, and March Madness will almost certainly put the state back on the upswing.”

A Glimpse Into February's Figures

Pennsylvania sportsbooks took in $509.5 million in bets in February, over $100 million, or 17.2% less than January's record $615.3 million. While the overall handle has now eclipsed $500 million in four of the last five months, February marks the lowest total handle since November's $491.9 million.

Gross gaming revenues were $33 million for February but after an usually high $16.8 million in bonuses and promotions, taxable revenues for the month came in at $16.4 million, down 51.8% from January's $34 million. The significant drop in revenues can be tied not only to the overall handle-drop, but also those promotions and a significantly lower hold rate, which was just 3.2% in February, about half of what sportsbooks expect.

$5.6 million in state taxes were collected from the sports betting revenues and $327,596 was contributed to local Pennsylvania coffers. Online apps continued to drive the industry, contributing $469.7 million, or 92.2% the overall handle in February. That's down from 94.3% in January and reflects a slow rebound of the retail sector in Pennsylvania.

Year-Over-Year Numbers Shows No Reason for Concern

While month-over-month numbers showed a significant decline in Pennsylvania over the 28-day period, a look at the year-over-year figures breeds a bigger sense of optimism, that February was a predictable hiccup rather than a trend for the industry in the state.

February 2021's $509.5 million handle is an impressive 54.5% increase from February 2021 when Pennsylvania's sportsbooks took in $329.8 million. Year-over-year revenues reveal an even bigger jump. The gross gaming revenue figure of $33 million was 246.9% above that same figure for the same period from 2020.

With February's report, Pennsylvania is able to look at the first eight months of their fiscal year and take with it a sense of satisfaction. They, over that period of time, have already eclipsed their 2019/2020 fiscal year total of $2.5 billion. As of March 1, Pennsylvania sportsbooks have taken in $3.6 billion in the first eight months of the fiscal year.

Looking Ahead

Like most states, Pennsylvania is looking toward March as a strong bounce back month thanks to the NCAA Basketball Tournament which is being touted as the biggest tournament in US betting history.

Meanwhile, Pennsylvania remains the third most "bet-friendly" state in the US after February, but there are others nipping on their heels. Michigan and Illinois have seen major spikes in their betting platforms and Michigan's mobile apps just went live this month.

So, the Keystone State remains in the elite class for now. Time will tell if their #3 spot is secure. Don't bet against Pennsylvania however - their fanbase has proven resilient and is a robust as any in the nation.