The Legalization of Sports Betting in Ohio Will Have Little Impact on the Stagnant Michigan Industry
At least some gamblers won’t have to go to Michigan to place wagers if Ohio legalizes sports betting.
Our projections show that the Ohio launch will only affect Michigan’s sports betting volume by less than 3% in 2023. It’s possible that this anticipated decline would cost $10 million in handling, $775,000 in income, and $65,000 in state taxes.
Ohio, where betting will start on January 1, 2023, has a significant interest in wagering, according to GeoComply statistics. According to PlayUSA, Ohio is anticipated to quickly surpass Michigan in terms of post-launch sports betting volume and income.
Some Sports Bettors from Michigan Will Switch to Ohio's Launch
Since January 2021, Michigan has legalised internet sports betting, allowing Ohio residents to cross the border and wager there.
However, there aren't many populated Ohio areas near the Michigan border outside of Toledo.
The majority of Ohio bettors that go to Michigan originate from the southeast region of the state, according to GeoComply, a sportsbook's preferred location detection engine.
During the first 10 weeks of the NFL season, approximately 694,000 attempts from Ohio to reach Michigan online sportsbooks were prohibited, according to GeoComply. Within 20 miles of the Michigan–Ohio border, 208,200 unsuccessful efforts, or 30% of all failed attempts, were attempted.
The image on the right shows I-75 at the Michigan/Ohio border. Red dots represent failures to access Michigan sportsbooks due to geolocation. The green dots represent geolocation passes.
The high number of geolocation passes near I-75 on the Michigan side, just north of Toledo, imply that Ohio-based gamblers may have entered the state to place wagers.
The GeoComply data does show some crossover, even if it cannot definitively establish the precise number of gamblers crossing the border into Michigan. It is not surprising that hundreds of thousands of customers have tried unsuccessfully to access Michigan sportsbook software from within Ohio, given the increased sports betting promotion now taking root in Ohio in anticipation of the launch.
Not Every Ping Hits the Same Number of People
Remember that this data concerns geolocation pings or attempts to confirm a place, not specific people. We may assume that many individuals tried and failed multiple times. Furthermore, just a small percentage of people have attempted and failed to cross the border to utilize the programs.
If even 10% of these pings represented gamblers from Ohio who crossed the border to use Michigan apps, this would equate to 20,820 customers. Based on state per-capita patterns, it would equate to approximately $10 million in lost handling, $775,000 in lost revenue, and $65,000 in missing state taxes for Michigan in 2023.
According to PlayUSA predictions for Michigan sports betting, Ohio's introduction would have a 2.2% influence on the handle and a less than 1% impact on revenue. According to PlayMichigan's projections, the total impact will be modest.
Ohio Is Not to Blame for Michigan's Initial Halt on Sports Betting
The growth of Ohio comes while Michigan's sports betting market is at a standstill.
In Michigan, sports wagering increased by around 10% throughout the summer, although September (-1%) and October (+1%) saw considerably more steady increases. The final numbers for the year will be made public in November and December, but the earlier few months indicated that Michigan's economy had slowed and maybe plateaued.
PlayUSA forecasts a 3% decline in Michigan handling to $4.6 billion in 2023 from around $4.8 billion in 2022, despite Ohio's arrival having little effect.
On the other hand, the expected transition from 2022 to 2023 varies based on the month. Forecasts indicate handling decreases for the first seven months of the year, but single-digit percentage rises over 2022 are anticipated from August through December 2023.
Michigan's Sports Betting Activity Is Expected to Fall from January to March 2023
The persistently low handling and revenue per person in Michigan is a factor in the unusually steep decreases predicted for the first three months of 2023. The estimated 2022 per-capita handle is $476, which is quite low based on similar markets.
In contrast, most healthy markets reach peaks far above $600, except Pennsylvania ($554). Smaller states, such as Indiana ($655), Illinois ($767), and Iowa ($731), score far better than Michigan. If the current pattern holds, Michigan sports betting will stop exhibiting substantial year-over-yearyear-over-year growth.
Ohio Is Well-Positioned to Succeed with Sports Betting
According to the GeoComply statistics, Ohio, which has a greater population (11.7 million) than Michigan, has a high degree of betting interest (10.0 million). Because of the open structure and synchronized launch on January 1, a strong start for Ohio and maybe some Michigan bettors could be predicted.
On game day, the Buckeye State will provide a record number of online (and offline) betting options.
The Ohio Casino Control Commission can only issue 25 Type A licenses to internet sports betting companies. Other rules that allow for extra expansion if doing so increases Ohio's economic gain.
Ohio's 10% industry tax rate for sports betting, similar to Michigan's 8.4% operator-friendly tax rate, makes it an intriguing location for sportsbook enterprises.
In Ohio, where there are already 12 legal sportsbooks, 16-20 internet sportsbooks will likely be accessible at launch. When Michigan initially began, it had access to ten internet sportsbooks.
According to Matt Schoch, senior content manager for Catena Media, Ohio will quickly overtake neighboring and rival Michigan as one of the top sports betting markets in the nation in its third year.
“Ohio has the most residents of any state, the most sports betting choices, and the strongest sports culture. After the law was approved, bets couldn't be placed until after more than a year had elapsed. Like Michigan, the opening size will be increased by having all of the big operators' debut simultaneously.”
This thorough rollout will benefit sports bettors in Michigan as well. Players may cross the border to take advantage of launch-specific promotional deals if an operator launches in Ohio but not Michigan.
In Ohio, there will be several sportsbooks that Michigan gamblers are accustomed to using, including FanDuel, DraftKings, BetMGM, Caesars, and others. Along with those companies, it will also feature others like Bet365, Hard Rock, Betfred, and Super Book.
How Much Will the Launch from Ohio Cost?
Ohio is ready for a fast start, thanks to the strong bids on Day 1 and the timing. The NFL finishes its regular season and moves into the playoffs in January, while the NBA, NHL, and college basketball are all in full flow.
Ohio is expected to produce $583 million in sports betting handle in its first month, while Michigan is anticipated to make $478 million in wagers in January 2023, according to PlayUSA.
The Super Bowl and March Madness will be played in the upcoming months, allowing Ohio to have a good first quarter. By March, Ohio's handle is anticipated to be $779 million, while Michigan's handle is anticipated to decrease to about $432 million.
Michigan took nearly two years to hit that number. By 2023, Ohio is projected to generate $8 billion in handle. It took Michigan almost two years to reach that number.
As a result, while Ohio will not be a big player in Michigan's sports betting business cooling down in early 2023, the Buckeye State will almost certainly be headed in a different direction than its northern neighbor.