Legal sports betting is in its infancy in the US. That means there is still a lot of confusion and misinformation floating around.
As such, the general public, as well as lawmakers trying to wrap their heads around the opportunities of legal sports betting, are leaning on industry experts and the gaming press for information and answers.
Unfortunately, sometimes the press and industry experts can add to the confusion.
Use a clear, consistent message
In an era of headline reading and 280 character tweets, it’s imperative that sports betting coverage is clear and tells a consistent tale. Not just in the body of an article or deep in a research analysis note, but through the mediums of social media, headlines, and article snippets.
Right now that’s not happening.
In a quest to pull out an interesting number, gaming analysts and columnists are bouncing back and forth between revenue and handle. (“Handle” is the total amount wagered during a given period, while “revenue” is what’s left over after the winning tickets are paid out.)
Whether talking about sports betting in isolation, or comparing it to another gaming vertical, the handle vs. revenue distinction is imperative.
Even if the article makes the distinction, the majority of people are only going to see the top line number.
Keep other online gambling numbers out of it
What’s even more problematic is the instances where sports betting is compared to other forms of gambling. With the high variance in revenue numbers, sports betting uses both metrics. Handle is always the sexier number.
Online gambling (casino and poker) almost exclusively uses revenue. That means sports betting is unwittingly being sold to the public, and lawmakers, as an exponentially bigger industry.
NJ has pretty high RTP so probably at least $600m a month, $7b a year, maybe more. And average wager is undoubtedly smaller, although I'm guessing the avg. casino player makes a lot more individual bets.
— Robert DellaFave (@RobertDellaFave) December 13, 2018
This further confuses lawmakers and the general public.
As we’ve seen in the past (hello daily fantasy sports), that confusion can lead to rushed, highly-flawed legislation designed to capture revenue that doesn’t exist, and public expectations that can never be met.
Fool me once, shame on you. Fool me twice…
When DFS was a legislative darling in 2016 and 2017, it’s talking heads did a wonderful job of using handle to describe the size of the industry and revenue when it came time to debate tax rates.
Lawmakers would hear about the billions of dollars bet annually and rush some legislation forward under the assumption that there’s a real opportunity to capture some much-needed tax revenue.
Only later on in the process would they discover the truth:
- Their state is only a fraction of that billions;
- The DFS companies’ revenues were only a fraction of that; and
- The state’s cut would only be a fraction of that.
Sports betting has largely followed DFS’ lead.
Advocates bounce back and forth between handle and revenue when it suits their needs. And lawmakers with only a cursory understanding of the industry start regurgitating these numbers, only to find out later that the opportunity is much smaller than they were initially led to believe.
But the damage is usually done by that point. The result is rushed legislation (often void of responsible gaming and problem gambling language) largely written by industry lobbyists.
That’s why it’s so important for the press and analysts to be as clear and to the point as possible.
Sports betting handle has its place
That isn’t to say handle isn’t important, or that it shouldn’t be reported. It has its uses, but those uses are largely confined to internal industry analysis, not the general public.
“It can show a directional trend and can provide some underlying context when margins are weak, and allow you to work out a theoretical hold over a longer time frame,” said Alun Bowden, senior consultant at Eilers & Krejcik Gaming.
“Generally it needs to be read alongside revenue as an explanatory and contextual tool for understanding revenue results and trends. When read together (handle and revenue), they can show the underlying health of the business. If your revenue jumps 20 percent and handle is flat, that’s usually less impressive than both going up 20 percent in the same period. But on its own it can be misleading.”
But sports betting revenue is where it’s at
The top line number in sports betting reporting should always be revenue.
Taking handle out of context is akin to a poker player leaving out how much they won or lost and only telling you how many hands they played.
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