Sports Betting In Oregon On Pace To Net $5.3 Million in Losses

• Oregon’s state-run Scoreboard betting app is on pace to badly miss projections in FY ’20.
• Both Scoreboard’s total betting handle and revenues will come in way under expectations.
• The primary cause of these losses was an over-optimistic budget.

SALEM, Ore. – Despite optimistic initial projections for the service, Oregon’s Scoreboard sports betting app is projected to lose $5.3 million during the fiscal year that ends on June 30, 2020.

Due to a variety of factors—primarily lower than expected betting handle and hold percentage—the Oregon Lottery, which runs the app, was unable to recoup high start-up and operating costs.

When the app was launched, officials estimated that Scoreboard would see $332.8 million in total betting handle in year one, but the updated projection  sits at $178.3 million, a staggering 46.5% decrease.

Revenues fell similarly short of projections, with Scoreboard on pace to make only $10.8 million, 59.4% less than its $26.6 million projection.

Despite very low revenues, Scoreboard did come in at $4.2 million under its projected operating costs—a nice silver lining to mitigate some of the losses.

Representatives of the Lottery have pointed to a variety of factors for Scoreboard’s lack of success, including a lack of options for college sports betting, the inherent challenges of starting a brand-new state industry, and pushback from state Legislators.

The shortfall came as disappointing news for Oregon sports betting, which had hoped that profits from the new venture could help cover some of its $25 billion in unfunded pension liabilities.

What Caused Scoreboard To Miss Projections?

One issue with the initial projection that becomes quickly apparent is that is estimated a hold percentage of 7.99%. Hold represents the percentage of total bets that a sports betting operator collects as revenue.

The national average hold since the repeal of the Professional and Amateur Sports Protection Act (PASPA) is 6.97%. Oregon is on pace to post a hold of 6.06% during the fiscal year.

Even accounting for statistical variability, a projection using the national average hold rate would still see Oregon bringing in $23.2 million in revenue. And at 6.06%, this number would be $20.2 million.

The obvious culprit, then, is the lower than expected total betting handle. Sports fans in Oregon showed far less interest in betting than anticipated.

There are myriad potential reasons for low bettor turnout. The largest sports market in Oregon is Portland, which ranks 22nd in the nation behind cities like Charlotte, Orlando and Sacramento.

Additionally, Oregon has only two major professional sports franchises: the NBA’s Portland Trail Blazers and Major League Soccer’s Portland Timbers.

The Timbers are the 128th most popular professional sports franchise in North America, according to Google search rates. The Trail Blazers aren’t much better at 100th.

Adding college sports betting, and more specifically college football betting, as some have suggested, could certainly help cover a large portion of the budget shortfall. The University of Oregon boasts one of the most valuable athletic brands in college sports, with successful teams in both football and basketball.

Still, it is unlikely that simply adding college sports betting to Scoreboard’s repertoire would increase betting handle by $150 million, let alone by the $377.6 million Oregon would need to meet its lofty year two projections of $555.9 million in total handle.

As unsatisfying an explanation as it is, there are no miraculous oversights or easy fixes for Scoreboard to get back on track toward meeting its goals. The Oregon Legislature simply overestimated the app’s audience.

The only solution for Oregon is to readjust expectations for 2021 to provide a more realistic set of goals.