Ohio Bonus Spending by Operators Exceeds Recent Launches

The Ohio sports betting launch was one of America's biggest launches in recent memory. Ohio has all of the biggest and most popular providers in the country operating in Ohio. A huge reason for the great start is that sportsbooks were giving out new user bonuses like candy on Halloween.

The Operator Playbook for State Launches

We have seen a fairly simply used plan for when sports betting operators launch in states across America in the last few years. That plan is to give out lots of free bonuses for new users to encourage signing up. Operators will vary the offers at times, and they consist of a few different types of offers.

Deposit Match

The bonus amount can vary depending on the website or app, but typically it is a percentage of the initial deposit, such as a 20% match bonus up to a certain amount. For example, if the bonus is a 20% match up to $1.000, then a new user who deposits $5,000 will receive an additional $1,000 in bonus funds. This example is what new users at DraftKings are getting at the moment.

Bonus Bet

The terms and conditions of the bonus can vary depending on the website or app, but usually, the bonus bet amount is a fixed value, such as $20, $50, or $100. The bonus bet can usually be used on any sports betting market, but there may be restrictions on minimum odds and maximum payouts.

For example, a new user might receive a $40 bonus bet when they sign up and make their first deposit of $20 or more. A bettor could then use the bonus bet to place a wager on a sporting event, with the winnings from the bet paid out as cash or bonus bets.

First Bet Insurance

This type of bonus typically allows new users to place a bet on a sporting event with their bet being covered. If the bet wins, the user receives the winnings as normal. If the bet loses, the user's stake is refunded in the form of bonus funds or free bets.

For example, a sports betting website might offer a new user a risk-free bet of up to $100. If the user places a bet of $100 on a sporting event and it loses, they will receive a refund of their $100 stake in the form of bonus funds or bonus betting credits. If the bet wins, the user receives the winnings as normal.

The terms and conditions of the risk-free bet offer can vary depending on the website or app, but usually, there are minimum and maximum bet amounts, and the bonus funds or free bets are subject to certain wagering requirements and expiration dates.

Operators in Ohio Spend More than they Make Initially

Operators in Ohio spent more than they were making in the early going of the Ohio launch. Operators like DraftKings and FanDuel, who are the two giants in the market, spent 157% and 163%, respectively, of their GGR (Gross Gaming Revenue). During the Opening month in Ohio, operators all together spent $320 million in bonus bets. 

This level of new user offers even surpassed the level of bonus on a per-adult basis that had been seen in other recent state launches. The number are really quite staggering; take FanDuel, for example, which spent $772,000 on new players in January. If it is assumed that the average spending was $250 per player, that means FanDuel got roughly 8% of the entire Ohio adult population to sign up with them. 

Bonus Spending Pays off in the Long Run for Operators

In other recent state launches, we have seen GGR be crazy early on, but usually within one quarter, the NGR (Net Gaming Revenue) catches up, and providers start making money. Take the state of Michigan, for example, where operators had a GGR of $55 million in quarter one of 2021 and a $57 million NGR in quarter three of 2021. 

It shows that the initial bonuses given out are just that, initial. Sports betting operators are doing everything they can to win the new customer race, and bonusing new users is a tried and true method. It will be interesting to track Ohio GGR and NGR in the coming months to see if the initial crazy bonus spending pays off, as it was more than the norm in the Buckeye state. If it pays off, it is not crazy to think we could see even more bonusing in future state launches.