While there’s plenty of anticipation about Massachusetts’ digital version of sports betting arriving Friday, operators could find the route to profitability more challenging there than in other states.
The Massachusetts Gaming Commission’s advertising and responsible gambling guardrails are far more strict than in other states and the cost to get up and running is high. While stakeholders believe that Massachusetts will outperform its population size, the Bay State is the 16th biggest in the U.S. and will become the 10th largest with live digital wagering. Its population is about one-third the size of New York’s and about half of Pennsylvania’s, the two biggest states in the U.S. with legal digital wagering.
In the second state to go live in 2023, the Massachusetts commission is set to launch seven digital platforms — Barstool Sportsbook (Plainridge Park), BetMGM (MGM Springfield), Betr (standalone), Caesars Sportsbook (Encore Boston Harbor), DraftKings (standalone), FanDuel (standalone), and WynnBET (Encore Boston Harbor). Ohio regulators launched more than 15 platforms and retail sportsbooks Jan. 1. In-person wagering began at Massachusetts brick-and-mortar casino sportsbooks on Jan. 31.
The challenges of the market are forcing operators to think hard about whether to enter it, and once the decision is made to do so, it seems likely that operators will have to find unique ways to reach customers.
To that end, FanDuel on Monday announced the first media partnership in the state. The biggest operator by market share in the U.S. announced a deal with New England Sports Network for the new NESNBets.com site. Consumers won’t be able to bet on the site, but they will find “odds, insights, and content,” according to a joint press release.
On Tuesday, the Boston Red Sox and MGM announced a partnership that will include an advertisement on Fenway Park’s iconic Green Monster, as well as a VIP suite, co-branded content on both companies’ social media platforms, and in-stadium experiences. The partnership is the first with a wagering company for the Red Sox, and it will give a Boston connection to BetMGM, which is tied to the MGM casino in the western part of the state near the Connecticut border.
Welcome to the new era of sports betting in Massachusetts! We are proud to announced that @betmgm is now an official betting partner of the @RedSox!
Learn more: https://t.co/jqBGwVlRay
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Please play responsibly. Must be 21. Gambling problem or concern? Call 1.800.522.4700 pic.twitter.com/NbyoeNpVai— MGM Resorts (@MGMResortsIntl) March 7, 2023
DraftKings can convert NH users
Many say that DraftKings, based in Boston, will have a leg up, in part because of its corporate roots in the state, but also because the company has a monopoly in neighboring New Hampshire. Since December 2019, Bay Staters have been driving north to cross the border just 40 miles from Boston in order to wager.
The Granite State’s second-biggest city, Nashua, sits just eight miles over the border, and it has plenty of sports bars and other establishments for those who want to do more than sit in their car and wager. In addition to offering the state’s only mobile app, DraftKings has three brick-and-mortar sportsbooks in New Hampshire.
DraftKings has also had advertising space inside of Fenway Park, most recently during the NHL Winter Classic held at the ballpark in January.
Once wagering is live in Massachusetts, DraftKings customers who have been accustomed to driving across the state line should have little difficulty switching their app from NH-based to Massachusetts-based. While the state of New Hampshire stands to lose some amount of tax revenue, DraftKings will enter the Massachusetts digital market with loyal customers happy to save the drive.
I live in Massachusetts and have been driving to New Hampshire ton place bets for a while now. Love #DraftKings Can’t wait to bet live in my home State. Any promotions for people like me?
— Nick (@Nick_NE) February 27, 2023
According to the EKG Line industry newsletter, operators in Massachusetts would need to capture 7-8% of market share just to cover costs. The seven operators prepared to launch have already paid a $1 million temporary licensing fee, and going forward they will pay $5 million for a five-year license. The state will tax operators at 20%, making it one of six states that tax at 20% or more. Tennessee also taxes at 20% on digital wagering, while the Pennsylvania tax rate is 36% and Delaware, New Hampshire, and New York all have tax rates that are 50% or more.
So far, two potential operators have withdrawn their applications — PointsBet, which had applied for a standalone digital license, and bet365, which had applied to be Raynham Park’s digital partner.
“Operators with limited war chests simply see better investment opportunities elsewhere,” wrote the team at Eilers & Krejcik Gaming in its newsletter.
FanDuel as DraftKings as market leaders
As wagering moves forward in Massachusetts, it’s not DraftKings or FanDuel that will be concerned with meeting that minimum market share. According to CNBC, FanDuel owns 42% of market share across the country, while DraftKings and BetMGM are the only other two platforms with a double-digit share.
That means that even well-known operators such as Caesars and Barstool Sportsbook have less than 10% market share, and making a dent is still harder for companies like Betr, the Jake Paul-owned microbetting platform.
“Almost 90% of the operators have a sub-2% share of the market,” FanDuel CEO Amy Howe said at the company’s Capital Markets Day last November, according to CNBC.
WynnBET could be in a unique position to capture more market share in Massachusetts than in the nine other jurisdictions where it is live. The company has 2% or less market share in five states in which that information is available, according to Sports Handle research, but its Encore Boston Harbor casino resort is the biggest retail casino in the state.
The following figures reflect betting activity for the year 2022:
| State | Latest report | WynnBET handle | WynnBET market share | Total mobile handle | Leading operator | Leader handle | Leader market share |
|---|---|---|---|---|---|---|---|
| Arizona | Nov. 2022 | $97,216,612 | 0.0181 | $5,373,529,964 | DraftKings | $1,775,455,569 | 0.3304 |
| Indiana | Jan. 2023 | $36,119,089 | 0.0087 | $4,135,879,931 | DraftKings | $1,364,324,778 | 0.3299 |
| Michigan | Jan 2023 | $31,055,751 | 0.0068 | $4,550,355,784 | FanDuel | $1,376,705,606 | 0.3025 |
| New York | Jan. 2023 | $92,928,999 | 0.0057 | $16,192,562,386 | FanDuel | $6,524,249,210 | 0.4029 |
| Virginia | Jan. 2023 | $43,663,830 | 0.0089 | $4,909,567,763 | FanDuel | $2,023,465,538 | 0.4121 |
It’s also possible that PENN Entertainment’s Barstool Sportsbook can capitalize on the Boston roots of its affiliated Barstool Sports media site. The latter traces its origins to founder Dave Portnoy’s “hardcore sports, hardcore gambling, fantasy football” sports newsletter, which he originally distributed for free on the city’s T and at other public spots. PENN recently completed its acquisition of Barstool Sports, opened a Barstool-branded sportsbook at its Plainridge Park retail location, and has become fully invested in Portnoy and Barstool Sports for promotion of the sportsbook.
Sizing up what it termed an “unusually fierce” competitive environment that officially gets underway Friday, the EKG Line observed, “MGM and Wynn have properties in the state and expect to outperform their typical market share (we’ve seen BetMGM do this in MI, for example). It’s also the home market for Barstool and DraftKings, while of course FanDuel is FanDuel.”
