Arizona Sports Betting Revenue Closed Off 2024 with 29% Decline

Despite a near-record spike in customer spending, Arizona's sports betting revenue took a notable hit in December, falling 28.9% year-on-year. The figures, reported by the Arizona Department of Gaming, paint a complex picture of a booming betting market juxtaposed with a significant dip in profitability for operators.

Arizona’s Sports Betting Performance in December 2024

In December 2024, Arizona's combined online and retail sports betting handle — the total amount wagered by players — reached a substantial $849.3 million (£655.5 million/€778.3 million). This figure marked a 20.2% increase from the same period in 2023, positioning it as the second-highest monthly total ever recorded, though it fell short of November 2024's handle by 5.4%.

A closer look reveals that the vast majority of this activity was online. Out of the total handle, $844.3 million was wagered on digital platforms, with only $5.1 million spent at retail sportsbooks across the state. This continued dominance of online betting reflects the growing preference among Arizona's bettors for the convenience and accessibility of mobile wagering.

Despite the substantial wagers, the revenue generated for sportsbooks in the state experienced a sharp decline. The adjusted gross event wagering receipts — which represent operators' revenue before deductions for free bets and promotions — stood at $49.3 million, down from $69.3 million in December 2023. This was a significant 41.4% drop compared to the previous month, when Arizona set a record with $84.1 million in revenue.
The Impact of Free Bets and Promotions

A key factor contributing to the decline in revenue was the impact of free bets and promotional offerings. Arizona bettors received $23.5 million worth of free bets during the month, which led to an adjusted revenue figure of just $25.8 million. This marks a dramatic 44.2% year-on-year decline and a 55.1% fall from November’s record-breaking revenue.

When considering these deductions, the sportsbooks’ hold — or the percentage of total wagers that they retain as revenue — stood at 5.8% before free bets were accounted for. However, after factoring in the promotions, the effective monthly hold dropped to just 2.77%. This suggests that while bettors were placing large amounts, a significant portion of those wagers was offset by the promotions designed to attract new users and retain existing ones. Arizona’s tax revenue from sports betting in December amounted to $2.6 million, a figure almost entirely driven by online wagering. Retail sportsbooks, by contrast, contributed a mere $3,600 in tax revenue, highlighting the dominance of online platforms in the state’s market.

As Arizona's betting landscape matures, operators are seeing increasing competition for market share. In this environment, Flutter Entertainment’s FanDuel has continued to establish itself as the market leader. The operator reported $20.7 million in revenue from online betting alone, thanks to a handle of $276.2 million. This resulted in a strong 8.41% hold, indicating that FanDuel has managed to retain a significant share of the state’s betting dollars despite the overall downturn in revenue.

Following FanDuel, DraftKings continued to perform solidly in Arizona, securing $16.3 million in revenue from a $275.6 million handle. The operator posted a slightly lower hold of 5.91%, which is still a strong result given the competitive market conditions. BetMGM, another prominent player, rounded out the top three with $3.9 million in revenue. The operator handled $112.3 million in bets, yielding a lower 3.47% hold. Interestingly, BetMGM was the only operator to report any retail revenue in December, despite multiple brands like FanDuel and DraftKings having retail operations in the state.

Other operators such as Fanatics and Caesars posted more modest results, with Fanatics securing $2 million in revenue off a $43.2 million handle and Caesars reporting the same figure from $47.6 million in bets. Bet365 also performed well, bringing in $1.8 million in revenue from a $40.1 million handle.

 

Despite a near-record $849.3 million in wagers, Arizona’s sports betting revenue took a significant hit, underscoring the growing challenge of balancing promotions and profitability in a competitive market

Looking Ahead

Arizona’s sports betting market faces an uncertain future, with growth in the handle masking a deeper challenge: the growing cost of customer acquisition through promotions. While December’s figures indicate that more money is being wagered, the significant reliance on promotional offers — which reduce profitability — presents a challenge for sportsbooks in terms of sustainability and long-term growth.

As the state’s betting market matures, operators will need to find ways to balance player incentives with profitability. For now, the dominance of online betting is clear, and operators will likely continue to focus their efforts on optimizing digital platforms to maintain their market positions. Arizona’s sports betting landscape may be evolving, but for now, it remains a high-stakes game where large wagers do not always translate to high rewards. The year ahead will likely show whether operators can navigate the complex dynamics of promotions, customer retention, and profitability in an increasingly competitive market.