Every month that Maryland online sports betting is delayed, the state is missing out on $4 million in monthly tax revenue. That’s $28 million in tax revenue over a full peak season.
In other markets with both retail and online sports betting, online wagers make up 90% of a state’s handle. Markets like New York have had even higher proportions of online sports wagers. However, New York’s high proportion of online wagers is partially explained by how inconveniently placed its casinos are placed. Before legalization, New Yorkers would take the ferry to New Jersey to place sports wagers online. It was more convenient than driving to one of the casinos located in the northern part of the state.
Maryland lacks these accessibility challenges. So, Maryland’s online gambling scene is more likely to resemble markets like Iowa or Colorado, which have several casinos across the state that are reasonably accessible for most residents.
Peak Season Handle
Based on previous retail sportsbook performance, Maryland sportsbooks could see about $270 million in handle per month during the peak season. Taking average sportsbook hold and write-offs into account, that comes out to approximately $4 million in tax revenue per month.
Sports betting’s peak season runs from September to March. This time frame includes football season, the Super Bowl, the World Series, pro and college basketball, and March Madness. This is where sportsbooks make most of their money.
It’s also when bettors will find most of the large sportsbook bonuses. Sportsbooks use events like the Super Bowl and March Madness to attract new customers. It’s a great way to draw from a pool of sports fans who could be enticed to bet.
Those promotions are also why tax revenue dips so low during February. They’re deducted from gross revenue, making high-promotional months low state tax months.
Low Season Handle
During the low season, Maryland sportsbooks could see just under $210 million in online sports betting handle each month. It’s noticeably lower than the peak season. Many casual bettors only bet on a few sports or events. So, it’s unsurprising to see a lull in the summer.
Out of that $210 million in handle, Maryland could see $3 million in tax revenue each month during the slow season. However, that amount will grow as sportsbooks acquire more customers during football season, the Super Bowl, and March Madness.
Growth in low-season revenue each year shows how many frequent bettors sportsbooks have acquired. Keeping bettors engaged during the low season is a seasonal challenge for every sportsbook. So, this year-over-year growth will be interesting to watch as Maryland’s sports betting market grows.
Maryland Online Sports Betting Revenue Methodology
Maryland Sharp projects online sports betting handle based on retail sports betting data. Online sports betting handle often comprises 90% of a state’s sports betting handle in states with both online and retail sports betting. So, we treated retail sports betting handle as if it were 10% of total handle and solved the proportion to project online sports betting handle.
For example, February 2022 saw $25.5 million in retail sports betting handle, and we projected $229.7 million in online sports betting handle. Total handle was 10 times retail handle, and we treated online handle as if it were 90% of that total, simulating a market that offered both retail and online sports betting from the start.
We kept the same hold, deductions, and tax rate to arrive at projected online gross revenue, net revenue, and tax revenue. From there, we compared average handle and tax revenue during low season months and peak season months.
During the peak season, we excluded December, because it didn’t represent a mature month of sports betting handle like January, February, or March (Maryland retail sportsbooks opened in the middle of December). Our low season average came from projected figures from April, May, and June.
While the sample size is small, it’s in line with the financial performance of markets with full seasons of sports betting financials. For example, Iowa’s retail sports betting handle remained steady even as online sports betting handle grew by leaps and bounds. Retail sports betting handle doesn’t drop in retail betting markets that introduce online sports betting later. So, these projections remain fair representations of what Maryland sports betting could look like once online sports betting is live.