Kentucky Posts $340 Million Handle In September And October

The Kentucky Horse Racing Commission reported a combined sports wagering handle of $340.8 million for September and October, as mobile operators jockeyed for a foothold in a state more known for horse racing.

September was a month primarily for retail wagering, with the state launching brick-and-mortar operations Sept. 7 and its seven mobile betting app operators entering three weeks later. Kentucky bettors may have had some beginner’s luck, as operators totaled just $2.7 million in gross revenue from nearly $45.9 million handle, limiting the house to a 5.9% hold.

Operators regrouped in emphatic fashion in October, however, routing the public with a staggering 18.5% win rate to claim $54.5 million in gross revenue off $295 million worth of accepted wagers. Kentucky currently ranks 13th nationally for October handle, but Arizona, Colorado, and Illinois will push it down the pecking order when those respective reports are released.

Based on September and October’s numbers, Kentucky Gov. Andy Beshear could have been teasing a higher handle for November. His office put out a press release Monday noting there had been more than $656 million wagered through Dec. 7, and the recently reelected Democrat touted the launch as a rousing early success.

With mobile operators unable to claim deductions for promotional credits, the state was able to levy taxes on $56.4 million in adjusted gross revenue spanning September and October. The 9.75% tax rate on retail winnings and 14.25% levy on mobile revenue resulted in more than $7.9 million worth of receipts for the Bluegrass State.

“This is an incredible start, and if this trend holds true, we will significantly exceed the $23 million projected revenue from sports wagering,” Beshear said in his release. “This frees up money for the General Fund that can be used to that can be used for other important Kentucky projects and initiatives, and that’s a win-win for the whole state.”

FanDuel, DraftKings fire the promo cannons

Kentucky’s seven mobile operators combined for a layout of a whopping $99.8 million in credits, free bets, matching deposits, and other goodies. The $27.3 million outlay the final three days of September was merely a prelude to a frenzied October in which the total was $72.5 million.

Unsurprisingly, FanDuel and DraftKings were the top two in promotional spend, with FanDuel doling out $42.5 million worth of credits, including $27 million in October. DraftKings provided new clients with $28.8 million in credits, while bet365 was third at $21.4 million.

The England-based operator has not been shy about spending money to make money. When including other large-market states Ohio and Virginia, bet365 has spent close to $115.8 million in promotions this year in just those three states.

Notable for its lack of promo spend in Kentucky was PENN Entertainment, which was to be expected as it was transitioning from Barstool Sportsbook to ESPN BET ahead of its mid-November launch. PENN’s outlay of about $80,000 was more than 10 times less than Fanatics, which was the only other mobile book to offer less than $1 million in promotional credits.

In terms of results, everyone had a good October on the mobile side. Holds ranged from 11.2% at Fanatics to an eye-watering 27.7% at bet365. FanDuel topped all operators with nearly $20.2 million in adjusted revenue thanks to a 17.6% hold, while DraftKings was roughly $1 million behind while crafting a 17.8% win rate.

Bet365, which ranked third in handle with $28.6 million, finished with nearly $8 million in gross revenue thanks to that  robust hold to round out the podium spot for operator winnings. BetMGM and Caesars both topped $2 million in gross winnings, while Fanatics claimed nearly $500,000 and PENN totaled more than $382,000.

Churchill Downs proves a popular draw

The most prestigious location for horse racing in the United States, Churchill Downs also showed itself to be capable of drawing patrons for sports betting well. The historic venue accepted more than $5.9 million in retail wagers in September and October to post an 11% hold in that span, claiming more than $652,000.

Churchill finished second in both categories to Red Mile Gaming and Racing, a Lexington-based track that totaled close to $6.8 million handle and $984,000 in winnings for a 14.5% hold. Turfway was the only other brick-and-mortar venue to clear $1 million handle in both months. The Florence track accepted $2.3 million in bets and almost $255,000 in revenue that resulted in a 11.2% win rate.

Retail handle totaled $17.2 million, with operators fashioning a 12.7% hold to claim $2.2 million in winnings. The 13.2% win rate on $8.1 million in accepted bets for October was nearly a full percentage point higher than September.

Wrapping up September

Kentucky’s report for September put a bow on a record-setting all-time national sports betting handle for a single month, which was nearly $170,000 shy of $11.6 billion. Known gross revenue was $1.06 billion, but a monthly record cannot be confirmed since Tennessee no longer publishes operator revenue in its monthly reports.

That said, the Volunteer State likely provided more than enough for the record since the gap in monthly operator gross winnings between September and January is slightly more than $4.8 million. Tennessee operators would have needed to post the lowest hold in state history — below 1.15% on the $418.1 million handle reported — for there not to be an all-time national high.