March 3, 2023 3 min read


Analysis Suggests Why Some Operators in Massachusetts Withdrew

BetRivers did not apply and PointsBet and bet365 pulled out because they do not believe they could reach profitability in MA

Second-tier sportsbooks will hardly reach profitability in Massachusetts at market maturity as they will need between 7% and 8% of the total market share to be profitable and this seems a steep climb for them.

Doomed from the Launch?

With the retail sports betting market in Massachusetts already live and the online sportsbooks less than 10 days from launch, independent consulting firm Eilers & Krejcik Gaming came up with an explanation for why some of the second-tier operators did not apply or have withdrawn applications.

Building its scenario based on PlayMA’s market projections at maturity of $5.7 billion in sports betting handle, the consultancy estimates that to reach profitability each sports betting operator would need between $32 million and $36.6 million in annual revenue.

For the big three players on the US sports betting scene, FanDuel, DraftKings and BetMGM, and several others, including Caesars Sportsbook, which went live ahead of the official market launch, and Barstool Sportsbook, generating such revenue would be easily achievable, for smaller sportsbook operators gaining such a market share is a tough call. Hence, BetRivers did not even bother to apply while others such as bet365 and PointsBet withdrew their applications.

Asked why the sportsbook decided to pull out of the running in the final hour, PointsBet’s director of communications, Patrick Eichner, did not provide a direct answer but rather outlined that the company had elected to “best optimize” the market where it already has operations comprising 13 US jurisdictions and Ontario.

Handling Promotional Write-Offs

There is also one big question mark in the analysis that relates to the handling of promotional write-offs by the State of Massachusetts as it is the biggest uncertainty in PlayMA’s market maturity projections.

Applying a scenario consistent with other states where the promotional deduction is 40% of gross revenue and around 3% of the betting handle, the analysis believes promotional bonus bets have the potential to boost the handle between 2% and 4%, or about $100 million, and based on the national average sportsbook hold of 8%, argues that operators’ revenue could be around $7.9 million higher with the promotional bets included.

The analysis claims that sports betting revenue for the state at market maturity could reach $87 million which is significantly higher than the projected by state lawmakers of $60 million but all would depend on the state’s approach to promotional write-offs.

Room for Thought It remains unclear how the consultancy came up to the conclusion that for smaller operators reaching 7%-8% of market share would be steep especially when 8% is the national average sportsbook hold. Are small sportsbooks doomed elsewhere too?

Lead Author

With 4 years experience as an analyst, Julie—or ‘Jewels’, as we aptly refer to her in the office—is nothing short of a marvel-worthy in her attention to the forex and cryptocurrency space as she quickly became the first pick to co-pilot education to the masses with Mike.

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