Ending a months-long streak of double-digit holds, Virginia recorded a surge in wagering activity to post a record $639 million handle for the month. November was the second consecutive month during which the Old Dominion posted a record handle, with an 11.8% increase over the $571.1 million worth of wagers accepted in Oct. 2023.
Nov. 2023 also showcased a strong increase in year-on-year revenue compared to the same period last year, with the increase coming in at a substantial 23.1%. The $639 million hold makes Virginia only the ninth state to exceed the $600 million mark in a single month in the post-PASPA era of legal sports wagering in the United States.
Understanding Handle, Hold, and Revenue in Sports Betting
It’s easy to mix up the terms handle and revenue when discussing sports betting. The similarity between the two is often capitalized upon by lawmakers, who conflate the two metrics to project the financial impact of legal sports betting in a particular state.
The handle is defined as the total money wagered by bettors over a particular period. The handle can be measured over a variety of chronological periods, such as months, quarters, and years, as well as in isolation with regard to different sports, bet types, and a range of other metrics.
On the other hand, revenue refers to the amount of money earned by the sportsbook after the winners are paid out. Like handle, revenue is frequently calculated across a range of chronological periods. A third term comes into play, known as hold, which refers to the amount of money held by a sportsbook on either side of every wager.
Virginia’s Single Digit Holds Leads To Dip in Revenue
In the case of Virginia, the hold for Nov. 2023 came in at 6.7%, a relatively low figure for Virginia since its all-time low of 4.6% in 2021. Almost all of the state’s $43 million in revenue came in from mobile betting apps, with the exception of a fractional $472,577 recorded through other avenues. Overall, this revenue figure stands at a shrinking of 25.3% when compared to Nov. 2022, thanks to the smaller hold.
Accordingly, Virginia levied taxes on $36.4 million in adjusted gross revenue. Betting operators in Virginia were able to claim nearly $1.5 million in promotional deductions, with another $5.2 million deduction coming in the form of federal excise tax and monthly carryovers of negative AGR. With 10 operators finishing with a net positive AGR in Nov. 2023, the state was able to record an inflow of $5.3 million in state tax collections.
Overall, Virginia has collected more than $63.8 million in state taxes from sports wagering alone during 2023. While this figure pales in comparison to established giants like Nevada, it is still $19.1 million more than the revenue recorded for the same period last year.
The state levies a flat 15% tax on sports betting activity as per each sportsbook’s adjusted gross revenue. 10 of the state’s permitted operators recorded a net positive adjusted gross revenue for Nov. 2023, with $5.5 collected in taxes accordingly. Around 97.5% of this figure, close to $5.3 million, will be deposited in the state’s general fund.
The remaining amount, around $137,500, will go towards the state’s Problem Gambling Treatment and Support Fund, which is run by the Virginia Department of Behavioral Health and Developmental Services.
Virginia’s Low Win Rate Affects Sportsbook Revenue
Sportsbooks in Virginia have grown accustomed to the pattern of high holds and substantial revenues from betting patterns in the state. In November, the win rate fell to an unusually low 6.7%. This figure comes in as the third-worse hold rate in the history of the nearly three-year-old legal sports betting market in Virginia.
In comparison to the previous months, Virginia sportsbooks recorded a hold of 11.2% and 10.4% in October and September, respectively, before the hold rate fell to 6.7% in Nov. 2023. The gross revenue recorded by Virginia state betting providers, $43 million, represents a nearly $21 million month-on-month decline when compared to the $64 million in revenue generated in Oct. 2023 and is 25.3% lower than $57.5 million reported in Nov. 2022.
The $5.5 million collected by the state was significantly lower than the $8.5 million collected in Oct. 2023. It was also a year-on-year decrease in comparison to Nov. 2022, when the taxes collected stood at $7.78 million. Through the first 11 months of 2023, $63.8 million had been collected in taxes for the state of Virginia. In comparison to the same period of the previous year, the figure only represents an increase of $19 million year on year.
Until Nov. 2023, gross winnings at Virginia sportsbooks stood at $496.6 million, indicating a 15.3% improvement over the first 11 months of 2022. Adjusted gross revenues recorded a growth of 40% over the same period of the previous year, coming in at a substantial $420.5 million.
Overall, it remains to be seen whether the dip will continue into the new year or if Virginia sportsbooks will be able to bounce back quickly. Bettors took home nearly $596 million of the $639 million wagered, resulting in the sharp dip in revenue.
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