Uneven February Revenues Must Carry Sportsbooks For A Long Time

• Sports betting revenues will likely be severely reduced for at least the next several months because of the widespread sports shutdowns caused by COVID-19.
• U.S. sportsbooks were mostly unaffected by COVID-19 in February and managed to post $83.1 million in reported revenue during the month.
• Companies will need to make their February revenue last, as there is still no end in sight to the shutdown of global sports.
• Even football season could see its start date pushed back by COVID-19.
• Once sports do return, consumer behavior will be difficult to predict from both an economic and psychological point of view.

LAS VEGAS – Nearly a month after the NBA’s announcement that it would be suspending play on March 11, there is still no end in sight to the widespread shutdown of the sports world. After a relatively normal February, sportsbooks might not see another healthy month of betting revenue for a long time.

February was a below-average month for most states in terms of sports betting revenue.

Total betting handle was a healthy $1.71 billion across states that report sports betting financial data. This was a 4.3% decrease in handle from January, but February was also over a 6% shorter month even with the leap day, so that falls well in line with expectations.

That betting handle only amounted to a total of $83.1 million in revenue, however, for a hold of 4.86%.

Additionally, hold rate varied heavily by region, and three states—West Virginia, New York, and Delaware— actually lost money in February.

Sportsbooks that lost money on the Super Bowl were likely counting on March Madness betting as a safe bet to recover those losses, but with all major American sports shutting down in mid-March, that never happened, leaving some companies on less-than-ideal footing.

When Will Sports Return To A Normal Schedule?

Since American sports leagues shuttered their doors, the timeline for a return to normalcy has seemingly been extended every week. The NBA’s initial announcement of a 30-day shutdown seemed excessive at the time but looks hopelessly optimistic in hindsight.

Hopes for a mid-April return gradually morphed into late April, then mid-May, then early summer. Now, even a late summer return seems optimistic after the cancellation of Wimbledon, which was scheduled to run from late June to mid-July.

There have even been rumblings about potential disruptions to the start of football season in September. Various sources have floated the idea of delaying the 2020 season until October or November and some have even suggested that the season might not kick off until spring 2021.

The best bet for live sports within the next few months will likely be if leagues decide to hold contests without fans, potentially from a centralized location. The NBA, for instance, is considering hosting the playoffs entirely from Las Vegas when play eventually resumes.

Major League Baseball has also considered beginning its season in late spring or early summer with all games being played at MLB spring training facilities in Arizona.

However, with infections increasing exponentially and the death toll mounting, the return of professional sports sits low on the list of global concerns.

Hosting sporting events also carries unavoidable health risks for teams, coaches, and other stadium and media employees, so these proposals for consolidated play look infeasible for the foreseeable future.

How Will This Affect Sportsbooks?

Many sportsbooks around the world have done an admirable job of adapting to these uncertain times with creative betting options, but the widespread cancellation of sports is going to be a huge blow to the sports betting industry.

Revenue loss will likely eclipse several hundred million dollars just from the paucity of sports to bet on. It could decrease further as the likely upcoming economic depression pushes consumers to tighten their belts and reduce leisure spending.

In a consumer perception survey conducted on March 17, less than a week after the first sports cancellation announcement, 26% of respondents said that they were likely to spend less on gambling because of COVID-19.

That number has likely risen as the disease’s impact on the economy has increased.

Even if sports make their scheduled return in the fall, consumer behavior is difficult to predict. The world hasn’t faced a pandemic like this since the H1N1 viral outbreak of 1918.

Consumers could be wary of gathering in masses at casino sportsbooks or general interest in sports could decrease. Alternatively, sportsbooks could see a surge of bets from bettors who are just ecstatic that sports have finally returned.

There simply isn’t enough information to predict the future of the legal sports betting industry right now.

Like most businesses, the only thing sportsbooks can do is take measures to reduce spending and try to wait out the storm.

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