H2 Gambling Capital analyses the factors that could drive ongoing growth in the US sports betting market, and whether products or new markets will play decisive roles.

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Expansion into new states

Growth in existing states

Expansion of in-play wagering

What drives gross win?

Expansion into new states

A material amount of sports betting gross win growth that H2 Gambling Capital has forecast is based on further expansion into new states.

H2 Gambling Capital forecasts US sports betting gross win to reach $23.2bn by 2030. Of this growth 57% is from states where sports betting is already legal, while 43% is from states where sports betting is expected to legalise in the coming years.

In terms of the importance of new potential states, California is by far the most important, although the recent ballot result means that H2 does not expect anything to pass in the state for at least another four years. By contrast, Ohio launched sports betting on 1 January 2023 with Massachusetts launching on 31 January 2023; these two states represent almost 20% of new state launch forecasts.

Growth in existing states

The current run-rate of online sports betting gross win as a percentage of GDP in states with legal sports betting is c.0.065% of GDP – which peaked in Q4 2021 at c.0.075% due to the seasonality of the business.

When compared to a number of key European markets, this is broadly in-line with the average.

However there are a number of key points which show that sports betting revenue can increase further.

  • There are a number of markets that are substantially higher than the average
  • A number of markets such as the UK also have substantial online horse race betting gross win, and therefore total online betting gross win is materially higher than that depicted for sports only
  • The gross win in the US is artificially inflated by excessive levels of bonusing, and therefore levels of customer losses are much lower than the current headline levels of gross win per adult / gross win as a percentage of GDP suggests

Expansion of in-play wagering

One of the key drivers of growth going forward is expected to be the higher adoption of in-play wagering. In-play wagering currently accounts for c.50% of US sports betting handle and c.44% of sports betting gross win. This compares to c.57% for Europe overall, and c.64% for sports in Europe (excluding horse racing).

However, this European figure is weighed down by soccer, which has a lower in-play percentage. When looking at “stop-start” sports such as basketball and tennis, the proportion of handle that is generated through in-play wagering is 84% and 89% respectively.

Data from the US market suggests that soccer currently generates c.70% of handle from in-play wagering, with tennis much higher than this. By contrast, for US sports, basketball (NBA and CBB) are currently trending around 50% of handle in-play while football (NFL and CFB) and baseball (MLB) are trending still down at 35-40% of handle in-play.

With baseball and football both having similar “stop-star”’ characteristics to basketball, there is no reason that US sports betting in-play handle could not get to over 80% of total wagering. Furthermore, Bet365 – the world’s largest online betting operator – noted in its 2019 annual report that 79% of revenues are generated through in-play wagering.

Repetitive betting drives gross win – not hold margin

The focus of US sports betting operators over the past year or so has been on parlay wagering, given the higher hold margin. However, the driver of gross win is repetitive wagering opportunities rather than hold margin – as evidenced by the preference of lower margin fixed odds wagering over higher margin pari-mutuel wagering.

This is further evidenced by the higher average spend of igaming over sports betting. Igaming is a high turnover, low margin product, and the average annualised gross win per adult in states where igaming is legal in the US is currently at c.$160, compared to c.$60 for sports betting.

In states where both sports betting and igaming are legal, every major state has a significantly higher average gross win per adult for igaming compared to sports betting.

H2 Gambling Capital is widely recognised as the leading authority regarding market data and intelligence on the global gambling industry. Our team of analysts have been tracking the value of the sector since 2000.
The intelligence generated by H2’s industry forecasting model has become by far the most quoted source regarding the sector in published company reports, transaction documentation and sell-side analysts’ notes, as well as in the trade/business media.
The H2 Subscription service is used by the vast majority of the sector’s operators and suppliers; its major financial institutions, governments and regulators; and also, its media outlets in their benchmarking of performance to shareholders.
H2 North America is a new subscription service to cater for those specifically focused on the North American market.
H2 North America offers detailed data going back to 2003 / forecasts going out to 2027 on all aspects of the land-based and online gambling market, including detailed by-state monthly market share of the sports betting / igaming market, and financial models / news flow of over 80 companies across the gambling space. This new product also includes monthly and quarterly reports specifically focused on the North American sports betting and igaming market.

H2 is the lead data partner of Clarion Gaming and iGB.

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