CINCINNATI — When New York launched its sports betting industry a year ago, gambling companies blanketed bettors with promotional offers worth up to $3,000. The industry lost a bundle. Ohio is paying the price.
Less than 40 days before Ohio goes live, sportsbooks are offering promotional incentives worth a few hundred dollars. While experts say the offers could increase on or before Ohio’s launch date of Jan. 1, the days of big-money promotions are over.
“What’s plagued this industry is the bonus hopping, people going from one bonus to another and not really giving your service a chance,” said David Paschkes, chief commercial officer for Tipico, an online sportsbook that partnered with the Columbus Crew to secure a license in Ohio. “We’ve always been really smart about how we go about not only finding the right customers that are going to be profitable over time and use this as an entertainment experience, but it’s very important that you focus on spending your money in a smart way.”
At a Nov. 16 investor conference, the industry’s market leader, FanDuel, touted its ability to “acquire customers more efficiently” by spending 29% of its revenue on promotion, compared to 44% for DraftKings and 64% for BetMGM.
“There is now so much pressure on a lot of these bigger sportsbooks because bonuses have been such a drain on them,” said Ryan Butler, a journalist who covers the sports betting industry for iGamingNext.com. “A lot of these sportsbooks have lost hundreds of millions of dollars, mostly through these promotions and free bets.”
Butler expects promotional offers to rise above $500 in Ohio. He adds that bettors can make the most out of Ohio’s promotional climate by downloading several apps and reading the fine print to make sure free bets don’t come with too many strings attached.
“There is what’s known as a rollover in the industry,” Butler said. “One times rollover is not that bad. But look, if it’s 10 times rollover, which means you have to bet 10 times your initial wager to even be eligible to access those funds, those can be really tricky. So, make sure you’re reading those closely.”
Alex Williams is a DraftKings customer from Ludlow, Ky. He typically bets only when he’s traveling through states where sports betting is legal. But now that Ohio is about to launch, he’s thinking about downloading more apps to sample promotional offers.
“I’d probably switch if the promotion is good,” Williams said while lunching with co-workers at Molly Malone’s Irish Pub in Covington. “I don’t bet that heavy, and if I’m doing $5 or $10 bets here and there, $1,000 is going to go a long way.”
Williams said he wouldn’t want to try more than a handful of Ohio’s two dozen licensed online sportsbooks because he wouldn’t want that many companies tied to his bank accounts. But he could see trying several and staying with the app he likes the most.
“It’s going to go down to how easy is it to use, how secure is the web site, are they doing things to get people more engaged on their platform,” Williams said.
Tipico will announce its bonus offers next month. For now, it’s focusing on its “Win Ohio” contest where bettors pick winners in selected matchups and earn free-bet credits that range up to $500, depending on their place on the leaderboard.
The company also expects to pay about 50 bars and restaurants to convince their customers to download and use Tipico’s betting app. The customers would get free food and other entertainment offers, while bar owners would get “a bounty on acquisition and retention” of new customers.
The bounty depends on the quality of customers,” Paschkes said, “but it’s very lucrative.”
