Sportsbook stock prices have taken a massive hit in recent months, as investors and analysts are taking notice of how much money these operations are burning in the ongoing rush to acquire a customer base.
And while each sportsbook goes about things its own way, giving away promotional money and bets is certainly one way to try and grab customers.
But it also takes a chunk out of the bottom line, and the difference between gross betting receipts — which includes promotional play — and adjusted gross betting receipts, which, according to Michigan law, means “gross sports betting receipts less a deduction for the monetary value of free play wagered by authorized participants as an incentive to place or as a result of their having placed internet sports betting wagers,” can sometimes be dramatic.
In short: Handle means all the money wagered, gross receipts is all the money the sportsbooks won, and adjusted gross receipts is all the money the sportsbooks won less the “money” won from free bets and free play.
Confusing? It is. But to bottom line it: The sportsbooks only pay taxes on the adjusted gross receipts (AGR), which makes that number — basically, how much actual money the sportsbooks won from bettors — increasingly important, especially as the market matures.
Three stand out
In 2021, FanDuel made $52.3 million in AGR with a handle of over $993 million. BetMGM wasn’t far behind, with $40.7 million in AGR on $828 million of handle. And while Barstool’s handle was far behind at $350.5 million, the company pulled in a solid $14.9 million in AGR.
To: The Other Michigan Sportsbooks
From: The Barstool Sportsbook pic.twitter.com/0HfvvIXhCw
— Clem (@TheClemReport) January 22, 2021
Now compare those three with DraftKings, which was second in handle with $951.1 million, but managed an AGR of only $8.2 million.
Clearly, while DraftKings has a large share of the total market, its share of actual sportsbook revenue is significantly lower.
DK claims just 7.4% of the total AGR across the 14 sportsbooks. To compare, FanDuel accounted for a whopping 47.2% of the total AGR, BetMGM another 36.8%, and Barstool another 13.5%.
It doesn’t take a math whiz to realize those four numbers above add up to more than 100% — and that’s because six sportsbooks actually lost money on the year, as measured by AGR. Those books were “led” by Four Winds and PointsBet, each of which lost more than $1.8 million. Caesars, however, took the cake by losing more than $2.5 million.
Clearly, the haves and have-nots in the Michigan sportsbook world are beginning to shake out. (And while AGR is an important metric, it doesn’t take into account advertising spend for the sportsbooks. Add that to the mix, and Barstool — which depends almost solely on Dave Portnoy and social media when it comes to advertising — is all of a sudden looking very formidable for the long haul.)
Im gonna run for Governor and ban sports betting in Michigan so I don’t have to see literally 30 sportsbook commercials every red wing broadcast
— blashdril (@veIeno) February 15, 2022
A small ‘wynn’
One sportsbook, however, seems to be threading the needle quite nicely. WynnBET has been very quietly posting a run of small positive months. It’s not the biggest sportsbook in the state — in 2021, the company accounted for a mere 8% of the total handle — but nine out of Wynn’s 12 months were winners for it in Michigan, and the sportsbook kicked 2022 off with another profitable AGR score.
As for everyone else? Looks like 2022 is bringing more of the same, with seven sportsbooks sporting a negative AGR for the month of January.
If 2021 was a year of massive growth for the sportsbook industry, 2022 may see some contraction. And Michigan numbers may prove to be a bellwether.