Industry-leading research and consulting firm Eilers & Krejcik Gaming projects that Kentucky’s smaller market size may deter some smaller or “tier 2” online sportsbooks from setting up shop in the commonwealth.
The analysts at EKG provided a summary of projections to PlayKentucky, which included this one:
“One or more tier 2 OSB operators (e.g., BetRivers, PointsBet) pass on the (Kentucky online sports betting) opportunity because of the state’s lower revenue ceiling.”
That projection aligns with others made about the Kentucky sports betting industry. EKG projected that FanDuel and DraftKings will capture 75% of the market. They also projected that not all available licenses will be claimed.
Most licensees will be fighting for a small piece of the pie
The state’s nine horse tracks and the Kentucky Speedway can each partner with up to three online sports betting partners. Thus, Kentucky will have up to 30 licensed online sportsbooks. If EKG’s predictions hold true, most online sportsbooks will be fighting for the remaining 25% of the market.
Kentucky sportsbooks are projected to handle slightly more than $2 billion in annual wagers. By comparison, Ohio bettors are projected to wager $9-12 billion annually. That would put Ohio in the top five largest sports betting markets in the country. Ohio currently has 17 online sportsbook options. It’s unlikely Kentuckians even have that many options.
Sure, $2 billion is still a lot of money. However, sportsbooks end up with much less than that. The average hold for a sportsbook, the amount won after paying bettors, is anywhere from about 7-8%. While there’s money to be made in Kentucky, Eilers & Krejcik believe smaller companies may choose to focus on their current markets and prepare for launch elsewhere in lieu of fighting for a small win in the Bluegrass State.
As for BetRivers and PointsBet, both companies actually are active in similar-sized markets like Iowa and Louisiana. Those states each took in about $2.3 billion in sports bets last year. Those specific companies are also active in smaller markets like Maryland and West Virginia, where bettors placed less than $1 billion in bets last year.
Fanatics sale could slightly alter prediction
But PointsBet was sold to Fanatics for $150 million last week. Fanatics is seeking to make a dent in the US sports betting industry. Thus, we could easily see Fanatics try its hand in Kentucky.
Still, there are many other “tier 2” online sportsbooks that bettors may or may not see in Kentucky. Some of those include WynnBET, Betfred, Betway and BallyBet.
Beyond DraftKings and FanDuel, sportsbooks that tend to hold their own in other markets and are likely to join the ranks in Kentucky are Caesars Sportsbook, BetMGM and Bet365.
PlayKentucky recently ranked which online sportsbooks are likely to launch in Kentucky.
