It appears this year could be the last in which the Pennsylvania sports betting market continues to grow in a major way. While Pennsylvania is seeing a healthy boost in betting volume thanks to the best NFL start yet for sportsbooks, the future forecast is not as bright.
PlayPennsylvania projections for 2023 show a year-over-year increase of just under 3% for PA sports betting handle and revenue. Our forecast indicates a 2023 handle of $7.65 billion and revenue of $609 million.
While several factors could contribute to the decline in growth, the main cause of the potential leveling off is that the PA market is now considered mature. This means it isn’t expanding in any meaningful way, as there are minimal new sportsbook operators launching in the state.
Combine this with multiple new markets in the region that recently went live or are readying for launch, and PA sportsbooks look poised to plateau.
Although results like this are expected from mature markets, it is slightly surprising to see this lateral movement so quickly. Let’s take a deeper dive into the PA sports betting projections for next year and how they stack up against the current environment.
PA sports betting 2023 projections predict dramatically slowed growth
PA is on pace to reach $7.65 billion in sports betting handle in 2022 with revenue around $609 million, according to PlayPennsylvania. These projections represent modest year-over-year increases of 2.5% and 2.7%, respectively.
While it’s not quite at the top, the peak of the PA sports betting market is in sight.
Part of the reason betting figures seem primed to level off in 2023 is because of their impressive showing right now.
PA sportsbooks are on pace to end the year 13.9% better than the previous year in terms of betting volume. The revenue forecast indicates a rise of 17.2% for 2022. A big reason for the current year’s growth derives from a strong start to the NFL betting season.
September handle jumped more than 11% compared with 2021. PA sports betting providers accepted more than $645 million in bets during fall’s first month, the third-best for the state and a month-over-month increase of 78% over August.
Revenue figures also notched some quality marks in September. PA operators pulled in more than $75 million overall, a rise of 79% month over month thanks to an above-average hold of 11.7%.
PA sports betting figures set to plateau as market matures
As market maturity sets in, it’s typical for states to see betting numbers level off. This already is underway in the New Jersey sports betting landscape, while Pennsylvania is on the cusp of following suit.
May marked the three-year anniversary for the debut of online sportsbooks in PA. PlaySugarHouse entered the market as the first online sports betting app in May 2019. That was about six months after the first retail sportsbook, Hollywood Casino at Penn National Race Course, opened in Nov. 2018.
At 36%, Pennsylvania features one of the highest tax rates among competitive commercial sports betting markets. Only New York is higher at 51%. While it puts a large dent in operator revenue, the massive size of the PA market made it a key destination for top sports betting companies.
The first entire calendar year offering both online platforms and retail books was 2020, a year that brought many different obstacles for the betting industry with COVID-19 regulations. Casino closures and sports stoppages limited business, but PA still managed to record $3.58 billion in handle for the year.
The market shot up from there with sports fully back in 2021. However, as we can from the following chart, 2022 will be the last year in which we see significant growth in PA sports betting handle.
Surrounding state launches will eat into PA sports betting volume
Besides market maturity, increasing competition from surrounding states also is likely to have an effect on PA sports betting volume. In 2023, PA will be surrounded by states with legal online sports betting as Maryland and Ohio join the markets that already exist in New Jersey and New York.
NY commercial and tribal casinos began taking bets in 2013, but the state just debuted online apps in January 2022. New York sports betting immediately established its dominance in the US market. In September alone, Empire State bettors wagered more than $1.2 billion.
Our PA estimates take into account the fact that the New York market is set to continually grow into its second full year with online sports betting. NY is trending toward $16.8 billion in handle for 2023 with revenue approaching $1.4 billion, according to our projections.
This would result in 119.6% higher handle than what we project for PA in 2023, and 125% more in terms of revenue.
Outside of New Yorkers, sports fans from Ohio and Maryland will also no longer be in need of PA betting apps soon. Ohio is looking at a Jan. 1, 2023 launch, while online platforms in Maryland could go live in December.
Despite Ohio just entering its first year with legal sports betting, we expect the Buckeye State to outperform Pennsylvania for betting handle in 2023. Our figures project Ohio to land above the $8 billion mark next year for handle (4.9% more than PA), with revenue coming in around $578 million, 5.1% less than projected PA revenue.
PA sports betting projected to slide to No. 7 for national betting volume
If the projections hold, it would be a very impressive start for the Ohio market. Arizona is also expected to pass Pennsylvania in 2023, meaning the PA sports betting market would slide from No. 5 to No. 7 for annual betting handle.
Maryland isn’t supposed to reach the level of these Ohio figures, but it still has high expectations for a much smaller market. Our estimates show Maryland’s opening year bringing in around $4.41 billion in bets, with revenue hitting $353 million in 2023. West Virginia also has legal online sports betting but is a much smaller market. WV could see 2023 handle around $516 million with revenue of $43.2 million.
One of the only neighboring markets around PA that appears headed for a similar plateau is New Jersey. The Garden State is up only 2% year over year in 2022 for sports betting handle, which includes a 14% year-over-year decline for September.
NJ sportsbooks are looking at a down year in 2023. PlayPennsylvania’s forecast has the NJ sports betting handle for next year at $8.38 billion, while revenue should finish around $684 million.
NFL betting, Phillies playoff run and parlays proving huge for PA sportsbooks
September provided a good reminder of how much PA and other states’ sportsbooks rely on NFL betting. Every fall, sportsbooks witness a sizable surge in betting thanks to the return of the NFL. College football also ranks near the top of the list of popular sports to bet on in the US.
Even though this year could mark the last in which PA betting numbers see sharp growth during the football season, sportsbooks are in great shape at the moment for a number of reasons.
Sportsbook operators across the US got some help in September from a high rate of NFL upsets in the first three weeks of the season. Betting apps are also ramping up their parlay betting products, a bet type that returns high margins for the house.
Pennsylvania is showing much stronger year-over-year growth in betting volume for the NFL season when compared with other maturing markets. PA sportsbooks can thank the Philadelphia Eagles fin part for this success. The Eagles are 8-0 through the first two months of the season, and are the only remaining undefeated team in the NFL.
Pair that with the fact that the Philadelphia Phillies made it to the World Series, and PA sports betting numbers enjoyed a major seasonal boost.
September’s handle surpassed $645 million in bets, which is about $66 million more than September of 2021. And that was with just three full weeks of NFL games. It’s a great sign for PA sportsbooks, as October is sure to bring even higher betting handle.
Pennsylvanians projected to bet $2.18 billion on football in 2022-23 season
As for football betting alone, PlayPennsylvania projects PA sportsbooks to see around $2.18 billion in bets and $187 million worth of revenue for the full 2022-23 season.
October, November and December of 2021 combined to average nearly $763 million in monthly handle altogether. Look for this year to exceed that with a new record to follow in January, the highest-volume betting month.
PlayPennsylvania projects even more football betting volume in 2023, but only by a small margin. We estimate combined Pennsylvania NFL and college football handle to hit $2.24 billion in 2023. Revenue will likely see a slight uptick, as well, to $192 million.
For now, Pennsylvania sportsbooks are riding the wave of sports hype surrounding its Philadelphia teams and NFL betting. Although we expect the growth to taper off in 2023, PA sports betting is proving to be a healthy and sustainable mature market with steady returns for operators and the state.
