DraftKings, FanDuel Off to Fast Starts in Arizona Sports Betting

Some familiar names are pacing the field in the rapidly growing regulated sports wagering market in Arizona.

DraftKings (NASDAQ:DKNG) and FanDuel, which along with BetMGM, usually control the top three spots in the states in which they offer online sportsbooks, are leading the way in the southwestern state. Regulated sports wagering launched in Arizona last September, and January 2022 data indicates the monthly handle there was $564 million. That makes the state the eighth to top the $500 million mark in monthly sports wagers placed.

Only New York, which has more than double Arizona’s population, was faster to a monthly handle of $500 million.

To be precise, online sportsbooks in Arizona accepted $563.7 million in bets in the first month of this year, trouncing the prior handle record of $499.2 million set just one month earlier.

Arizona’s quick ramp-up has been a function of great timing, local enthusiasm, and an attractive regulatory framework that has appealed to nationally known sportsbook operators,” says PlayAz.com analyst Eric Ramsey.

January gross revenue jumped to $41.9 million, up 5.2% from $39.8 million in December 2021. That’s good for a hold rate of 7.4%, which is impressive among the larger states where sports betting is permitted.

Good News for DraftKings, FanDuel

With its shares down 30.65% year-to-date, DraftKings can use all the good news it can get. Arizona is providing some.

“Major operators have had nearly four years of practice launching new markets, as legalization has marched across the US, and Arizona has been a beneficiary of that know-how,” adds Ramsey.

FanDuel is a unit of Flutter Entertainment (OTC:PDYPY), while BetMGM is a 50/50 joint venture between MGM Resorts International (NYSE:MGM) and Entain Plc (OTC:GMVHY).

Promo Spending High in Arizona

As is the case with essentially every other state where sports wagering is permitted, promotional spending by operator is high in Arizona.

Operators there doled out $20.9 million in promotional credits in January, meaning the state taxed just $19.6 million in gross even receipts, which created just $2 million in revenue for state coffers.

Still, it’s clear Arizona’s sports wagering market, which allows participation from commercial and tribal operators, is vibrant and rapidly expanding. Eighteen of 20 related licenses are accounted for, and there is one mobile app from a tribal gaming entity that’s awaiting launch.