In the two-plus years Virginia has had legal sports wagering available, the Old Dominion has played itself into top 10 status nationally on a monthly basis and is one of just nine states to have surpassed $8 billion in total handle post-PASPA.
A budget amendment approved last year ended promotional deductions for mobile sportsbooks that had been operating in the state longer than 12 months. It proved a windfall in terms of state tax revenue — after it took effect, the $36.6 million in receipts from July through December accounted for more than 70% of the $51.8 million raised for all of 2022. It also prompted operators to lobby for SB 1142, a bill recently passed by the Senate that would allow mobile sportsbooks to deduct promotional revenue up to 1.75% of their monthly handle.
The Virginia Lottery does not provide handle and revenue by operator when it publishes monthly reports, but it did fulfill monthly state Freedom of Information Act requests filed by Sports Handle covering all of 2022, when more than $4.9 billion was wagered. Some of the Virginia-based trends mirrored national ones, namely FanDuel being a runaway marketplace leader in both handle and revenue.
Other information included monthly reports showing operators steadily progressed zeroing out negative adjusted revenue over multiple months. That process accelerated for some operators once the budget amendment took effect. Some operators that entered the state in 2022 went back and forth, carrying over negative totals some months and directly paying taxes other months. Some operators paid zero state taxes in 2022, in some cases carrying negative adjusted revenue as far back as at least October 2021.
FanDuel’s domain extends into Old Dominion
| Operator | 2022 Handle | 2022 Handle Market Share | 2022 Gross Revenue | 2022 Win Rate |
|---|---|---|---|---|
| FanDuel | $2,023,465,538 | 41.17% | $241,158,407 | 11.92% |
| DraftKings | $1,141,237,112 | 23.22% | $98,028,347 | 8.59% |
| BetMGM | $889,415,773 | 18.10% | $89,932,072 | 10.11% |
| Caesars Sportsbook | $377,044,708 | 7.67% | $22,944,202 | 6.09% |
| Barstool Sportsbook | $196,970,089 | 4.01% | $10,934,076 | 5.55% |
| PointsBet | $121,682,335 | 2.48% | $7,963,177 | 6.54% |
| OVERALL STATE TOTALS | $4,914,954,449 | $481,234,505 | 9.79% |
The overall revenue gains the house made nationwide in the second half of 2022 compared to the first half begin with FanDuel, which spent those six months bludgeoning the betting public and posting double-digit holds in state after state. Virginia proved another such haven for the marketplace mover on single-game parlays, with an 11.9% hold for the entire calendar year — and 13.7% from July to December, with each month above 11% and topping out at 15.6% in September.
The online titan was also among the most aggressive operators in terms of promotional deductions before discontinuation. Those averaged nearly $3.7 million for FanDuel in each of the first six months of 2022. The $22.2 million in allowed deductions was tracking to be nearly 50% higher than the $29.7 million in known deductions for all of 2021.
FanDuel performed so well, however, that it did not have any negative adjusted revenue to carry over at any point in 2022 and paid taxes every month. Its total tax bill for the calendar year was slightly more than $30.5 million, and had it been allowed to maintain its rate of deductions, it would have paid approximately $3.3 million less.
DraftKings was a distant second in both handle and revenue to its eternal rival, though it did surpass $1.1 billion handle. It also had a stronger second half of 2022 than the first, but the performance was relative. DraftKings had two months — August and September — with holds of 12.7% and higher, but the other four months ranged between 8.1% and 9.6%. The overall 8.6% win rate for the year left it less than $2 million shy of $100 million in gross revenue.
Like FanDuel, DraftKings did not have any negative adjusted revenue to carry over during 2022, but it notably ramped down its promotional spend from a high of $3.2 million in February to less than $1.1 million in the final month allowed in June. More than 61% of its 2022 gross revenue and over 76% of its adjusted revenue came in the final six months of the year, resulting in more than $8.1 million of its $10.6 million in tax payments coming in the second half of 2022.
Discontinuing promotional deductions impacted BetMGM the most in terms of 2022 dollars as it carved out a defined No. 3 spot in Virginia. Its $27.4 million outlay the first six months was highest among mobile operators, with a whopping $17.4 million of that coming from January through March.
In the second half of the year, BetMGM gave FanDuel a strong challenge for top win rate. It hit double digits every month from July through November as part of a seven-month streak before finally cooling off to 7.4% in December to end at 10.1% for the year. It finished with $8.1 million less in revenue than DraftKings despite accepting $251.8 million less in wagers.
The Emperor’s long path to positive AGR
Caesars Sportsbook, in Virginia’s No. 4 slot, finished 2022 with $377 million in bets placed and $22.9 million in gross revenue. But it did not pay state taxes in 2022 until September, when it was finally able to flip its adjusted revenue from the red to the black.
Caesars started the year being allowed to carry more than $3.5 million in negative adjusted revenue, and that deficit swelled to more than $4.7 million after posting negative AGR for both January and February. Its promotional spend of more than $2.3 million in February — always a big month with the Super Bowl — was nearly $1 million more than its gross revenue.
It had knocked more than $2 million off its negative AGR by the time promotional deductions were discontinued in July. Strong performances in both August and September resulted in more than $4.2 million in adjusted revenue, which was enough to make Caesars write out its first tax check to the state for $333,333 in September.
Barstool Sportsbook rounded out the top five mobile operators in handle ($197 million) and gross revenue ($10.9 million), but it stands out in the sense that its monthly numbers were nondescript. Its promotional spend was barely more than $1.7 million and extended into August — Barstool entered the state in October 2021 — and was less than $33,000 before the budget amendment provision applied to it.
While FanDuel and BetMGM were routing the public, bettors were more than holding their own versus Barstool, as its hold was below 5% for three of the final four months of 2022.
PointsBet was Virginia’s sixth and final mobile book to reach nine figures in handle at $121.7 million, and the Aussie operator had a 6.5% hold to fashion nearly $8 million in gross revenue in 2022. Having not entered the state until December 2021, it had almost the entire year to offer goodies to the betting public, and it had a total spend of more than $5.2 million.
Its first path to zero AGR was shorter than that of Caesars, with PointsBet needing seven months in total to whittle down a negative AGR as high as minus $860,498, but it also went on both sides of the fence on two other occasions in the second half of 2022.
It was the only one of the six most popular operators to take a monthly loss in gross revenue in 2022, finishing $169,800 in the red in October, when it was down more than $625,000 when including promotional spend. November proved to be a bounce-back month as it cleared $1.3 million in gross revenue — PointsBet’s best month in Virginia to date — and nearly $800,000 in adjusted revenue to make a small addition to state coffers.
Other scattered sportsbook musings
BetRivers and WynnBET, ranked seventh and eighth in handle and gross revenue, respectively, had slightly different paths to positive revenue. BetRivers, which had an overall hold of 5.3%, did not make its first state tax payment until August and totaled slightly more than $180,000 in such payments. Its overall negative AGR reached more than $512,000 after February’s figures had been tallied, and by the time promotional deductions ended, it had only cut that gap in half.
WynnBET, whose 5.1% win rate was the lowest of any operator with an eight-figure or higher handle, made its first tax payment of 2022 in July and then had a monthly loss in October that it didn’t reverse into positive adjusted revenue until December. It also did better market share for handle in Virginia relative to New York, as its $43.7 million handle in 2022 was 0.9% of the commonwealth’s wagers compared to the 0.6% represented by its $92.9 million in accepted wagers in the Empire State.
Bally Bet actually had its adjusted losses expand more than eight-fold in 2022 to more than $325,000 in negative revenue by year’s end. Its promotional spend of nearly $350,000 was close to triple its $127,659 in gross revenue, and Bally’s also ended the year on a three-month losing streak that wiped out $33,642 from that amount. The negative $326,041 in adjusted revenue on its books to end 2022 was its biggest monthly carryover.
Unibet did not pay any state taxes in 2022, as it finished with barely more than $327,000 in gross revenue from close to $8.4 million handle. It began last year with more than $383,000 in negative adjusted revenue, which it has since reduced to less than $70,000. The path is a longer one considering it cleared $50,000 in gross revenue in just two months, February and May, and also had two four-figure losses in June and December.
