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Michigan’s sports fans seemed to have a good grasp on online sports wagering during the state’s first month of its legalization, performing on par with the rest of the country.
After encountering some initial challenges in learning how to overcome the house in late January, the public swiftly adapted and experienced a remarkable February, clearly paving the path for long-term success in the emerging sector.
Certainly, the 28 days of February were indeed an exception, representing only a limited data set in a market that is still relatively new to draw definitive conclusions from.
However, during the initial months of Michigan sports betting, it seems that the betting public is approaching the average level seen in the industry.
However, it is possible that the local sports teams could assist local sports enthusiasts in increasing their odds of winning a few additional bets.
What is ‘sports betting hold’? How does Michigan’s compare?
The concept of hold is quite straightforward: It refers to the amount of money that the house retains after settling winning bets.
In the month of May, both online and Detroit retail sportsbooks in Michigan accumulated a total of $257.7 million in sports bets.
The hold rate for sportsbooks was 8.2%, resulting in a gross gaming revenue of $21.2 million, as reported.
The books deduct promotional expenses, such as free bets, as a write-off. Due to intense market competition, numerous promotions are available. Consequently, during the initial stages of Michigan sports betting, the adjusted revenue, which is the taxable amount for operators, remains relatively low.
In May, Michigan sportsbooks retained approximately 8.2% of the total wagering amount, which is consistent with the average since the state’s sports betting market began operating in select retail locations on March 11, 2020.
In May 2021, Michigan sportsbooks retained 8.1% of all wagers placed.
However, bettors can take comfort in the fact that the number is anticipated to decrease over time.
Sportsbooks hold more retail bets than online
Just before the pandemic forced widespread closures across the country, Detroit’s three sportsbooks had just begun accepting bets.
Afterwards, numerous tribal casinos throughout the state proceeded to establish their own sportsbooks, although specific figures regarding their operations remain undisclosed to the public.
In 2020, the Detroit casinos witnessed a total of $130.7 million in sports bets, generating $18.3 million in revenue. This translates to a hold percentage of 14.0%.
As of May 2021, the total amount wagered at Detroit casinos reached $128.2 million, resulting in a revenue of $10.3 million and an 8.0% hold.
Since their launch, Detroit retail casinos have accumulated $28.6 million from $258.9 million worth of bets, resulting in a hold percentage of 11.0% through May.
Michigan’s online sports betting market has seen sportsbooks holding $94.9 million in bets, which accounts for a 7.5% rate out of the state’s total of $1.26 billion.
Lifetime hold for Michigan sportsbooks
| Month/Year | Handle | Revenue | Hold |
|---|---|---|---|
| March 2020 | $593,956 | $105,548 | 17.8% |
| April 2020 | $0 | $0 | — |
| May 2020 | $0 | $0 | — |
| June 2020 | $0 | $0 | — |
| July 2020 | $0 | $0 | — |
| August 2020 | $15,744,256 | $1,977,052 | 12.6% |
| September 2020 | $33,503,929 | $4,376,407 | 13.1% |
| October 2020 | $46,120,824 | $7,596,972 | 16.5% |
| November 2020 | $25,080,140 | $2,337,638 | 9.3% |
| December 2020 | $9,720,393 | $1,883,240 | 19.4% |
| January 2021 | $150,849,896 | $17,423,564 | 11.6% |
| February 2021 | $325,569,037 | $9,395,302 | 2.9% |
| March 2021 | $383,691,892 | $35,238,593 | 9.2% |
| April 2021 | $274,212,630 | $21,922,961 | 8.0% |
| May 2021 | $257,748,035 | $21,228,714 | 8.2% |
| Total | $1,522,834,987 | $123,485,992 | 8.1% |
According to Eric Ramsey, a data analyst for PlayUSA, online sportsbooks generally retain a smaller portion of bets compared to retail sportsbooks. In fiercely competitive markets, the pursuit of customers further decreases the amount retained, as opposed to monopolized markets where operators can offer less favorable odds to bettors without consequence.
Competitive Michigan market favorable to players
Michigan is a fiercely competitive market, with 12 sports betting operators already launched and three additional ones on the horizon.
If you choose to place a bet on a game, you have the option to compare prices from different sources to find the best deal. This healthy competition encourages operators to offer attractive prices to players. By providing good odds and prices, operators can discourage players from seeking alternatives in the immediate future, thereby attracting them for the long run.
The numbers prove that when comparing this process to a market like Oregon or Washington, D.C., where the state lottery has been the sole legal online sports betting option, there are significant differences.
Washington D.C. has recorded a lifetime hold percentage of 15.7% during this week, whereas in Oregon, the house has maintained a 8.9% hold.
In contrast, Colorado (6.3%), Nevada (6.3%), and New Jersey (6.8%) stood out as the top-performing states. Notably, New Jersey leads the nation in online sports betting, making it a highly competitive market along with the other two.
Ramsey states that national online sportsbooks hold at a rate of 6.8%, while retail books hold at a higher rate of 9.8%. Considering that the majority of sports betting occurs online, the overall average is more aligned with the online percentage, with sportsbooks holding 7.2% of all sports wager amounts.
As Michigan continues to develop and online betting becomes more prevalent, with 92.5% of reported sports bets in Michigan being placed online since February (the initial month of online sports betting), it is expected that the statewide hold of 8.1% will gradually align with the national average.
January cold, February hot for bettors
Michigan players finally arrived at the current 8.1% lifetime hold after taking a meandering path until the spring.
During the initial 10-day period of online sports betting in Michigan, the house managed to retain an impressive 11.6% of all wagers.
During the month of February, online sportsbooks accounted for a mere 3.1% of the total, while the retail sportsbooks in Detroit experienced their first-ever loss since their establishment. The combined losses were equivalent to the entire amount wagered, with a payout of only 0.3% of the total bets placed.
In March, the overall retail and online sales accounted for 9.2%, followed by 8.0% in April and 8.2% in May.
Playinmichigan was informed by retail operators in February that the primary reason for increased betting was the overwhelming support for the Tampa Bay Buccaneers and Michigan’s own Tom Brady in the Super Bowl. Furthermore, the victories and successful betting outcomes of Michigan and Michigan State in prominent college basketball games throughout February also played a role.
In terms of January, if there had been a significant investment in promotions from the beginning, it could have enticed a larger number of casual bettors and encouraged riskier bets, ultimately benefiting the financial performance of the betting establishments.
How would success for the local teams play a role?
What about the other teams if Michigan and Michigan State wins, along with the presence of local favorite athlete Tom Brady, played a significant role in supporting Michigan bettors?
Could the books be taken down for good by a homer-heavy betting populace if the Detroit Pistons, Red Wings, Tigers, and (most importantly) the Lions were able to improve and coordinate their efforts effectively?
According to Ramsey, if local teams start winning, it could benefit bettors to some extent. However, the bookmakers will make adjustments to cater to the popular choices, especially if there is a significant increase in bets on the Detroit team that affects their profitability.
Moving forward in the coming months, bettors can expect to encounter periods of consistent success as well as instances where bookmakers emerge even more triumphant.
In the long run, the sportsbooks are destined to emerge victorious.
However, whether Michigan sports bettors can catch up to and match the pace of other jurisdictions, and meet the national average, will be a narrative we will closely monitor during football season, which is the prime time for betting.
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