Arizona Sports Betting Hits New Heights with $791.2 Million

Consumers in Arizona set a new benchmark for sports betting in October 2024, wagering a staggering $791.2 million. This figure surpassed the state’s previous record of $759.8 million from March 2024 by 4.1% and marked a 22.1% year-on-year increase compared to October 2023. However, despite the record handle, revenues in the Grand Canyon State fell short of historical highs, underscoring a shifting landscape in sports betting dynamics.
Breaking Down the Numbers

 

Recent Developments

Arizona's $791.2 million handle reflects robust consumer engagement, with $784.4 million coming from online platforms and just $6.8 million from retail outlets. Compared to September 2024, the total handle rose by 8.1%. Players won $735.6 million during the month, leaving $53.8 million in adjusted gross receipts—a decline of 6.9% from October 2023 and a sharper 31.5% drop compared to the record $77.4 million in September 2024.

Free bets, a common promotional tool among sportsbooks, significantly impacted revenue figures. After accounting for $30.2 million in free bets, adjusted gross receipts fell to $23.6 million, representing a 28.5% year-on-year decline. The adjusted hold percentage—calculated against total monthly handle—stood at a modest 2.98%.
Tax Implications

Arizona collected $2.4 million in privilege fees for October, with the overwhelming majority—$2.39 million—stemming from online betting. Retail betting contributed a mere $15,906. While privilege fees are an essential revenue stream for the state, the decline in adjusted gross receipts raises questions about long-term tax revenue sustainability amid the heavy use of free bet incentives. FanDuel retained its dominance in Arizona’s competitive market, generating $21.7 million in combined online and retail revenue from a $252.5 million handle, achieving an impressive hold of 8.59%. Despite taking a larger handle of $261.9 million, DraftKings secured second place with $15.1 million in revenue and a 5.77% hold.

BetMGM followed in third, posting $5.7 million in revenue from $99.5 million in bets, with a comparable 5.73% hold. Notably, Fanatics and Bet365 reported higher hold percentages at 7.14% and 7.69%, respectively, with revenues of $2.9 million and $2.9 million. Caesars and Hard Rock Digital also surpassed the $1 million revenue mark, while ESPN Bet fell just short at $974,591 with a 5.05% hold.
Challenges Amid Success

While October's record-breaking handle reflects the growing popularity of sports betting in Arizona, declining revenues highlight the challenges operators face in balancing promotional spending with profitability. Free bets, while effective for customer acquisition, are compressing net revenues and reducing the state's taxable income.

 

Arizona set a new sports betting record with $791.2 million in wagers, but revenues fell 31.5% short of the previous month's high.

Conclusion

The market also remains top-heavy, with FanDuel and DraftKings commanding a significant share. Smaller operators face stiff competition, with many struggling to achieve profitability amid escalating marketing expenses.

Arizona's October sports betting record underscores the market's immense potential but also raises questions about its long-term revenue sustainability. With consumer interest continuing to rise, operators and regulators must navigate the delicate balance between growth and profitability. For the state, ensuring steady tax revenues without stifling market competition will be key to sustaining the industry's momentum.