With July’s revenue totals in the books, the North Carolina sports betting industry is $24,701,407 from breaking even for the first time.
The state generated $327,970,314 in paid wagering revenue (total bet spending) and paid out customers $295,386,205 last month.
As the North Carolina Lottery Commission (NCLC) reported on the earnings, “In July, the gross wagering revenue was $42,226,040. After the 18 percent tax rate is applied, the estimated tax proceeds for the month would be $7,600,687.”
The $42 million total is countered by $12,405,039 spent by operators on promos and bonus offers to customers.
While operator promo spending has dropped dramatically since launch, it still outpaces revenue made from customers spending their own money.
Comparing promo spending to gross wagering revenue
The NCLC refers to promo spending by operators, somewhat oddly, as “Promo Wagering Revenue” (PWR). These are the bonus bets, site credits, sign-up bonuses, and the like that operators essentially pay to customers to join their sportsbooks.
On the other hand, there is “Gross Wagering Revenue” (GWR). GWR refers to the money sportsbooks make after paying out winnings, and before paying out taxes and fees.
Comparing PWR with GWR can give us an idea of how the North Carolina sports betting industry is moving toward profitability.
As is the case whenever sports betting launches, operators spend heavily on PWR to attract new customers. In North Carolina, the launch coincided with the men’s and women’s March Madness college basketball tournaments, an already high point on the sports betting calendar.
The combination of promo spending at launch plus the hype around March Madness led to massive PWR and a deep financial hole for operators.
Here’s a look at GWR as a percentage of PWR for the first five months of legal online sports betting in North Carolina.
| Month/Year | Promo Wagering Revenue | Gross Wagering Revenue | GWR as % of PWR | Collective Market shortfall |
|---|---|---|---|---|
| March 2024 | $202,605,909 | $66,496,213 | 32.8% | $136,109,696 |
| April 2024 | $79,650,621 | $105,251,672 | 132% | $110,508,645 |
| May 2024 | $30,946,064 | $63,080,347 | 203% | $78,374,362 |
| June 2024 | $16,450,309 | $40,302,263 | 245% | $54,522,408 |
| July 2024 | $12,405,039 | $42,226,040 | 340% | $24,701,407 |
| TOTALS | $342,057,942 | $317,356,535 | 92.8% |
As we can see, GWR started as a fraction of PWR in March, creating the original scenario where operators spent more to attract customers than they took in from those customers betting their own money.
That percentage changed by over 300% from March to April as promo spending dipped but GWR continued to rise. So, March was the only month operators paid more to attract customers than they received from them.
The percentage of GWR to PWR continued to increase through July, signaling a precipitous climb toward profitability that could occur next month. However…
Football season will slow the roll to NC sportsbook profitability
As most people reading this report surely know, football season begins in earnest in September.
And that’s a big month for sportsbooks. Especially, North Carolina sportsbooks. NC sportsbook promos will surely get a shot in the arm as Sept. 2024 marks the first football season that North Carolinians will follow with live online sports betting.
For sportsbooks, PWR will ramp back up to levels we saw at launch. We can get an idea of what to expect from Virginia. This isn’t a perfect comparison since Virginia could deduct promo spending from tax revenue when it launched. Still, the gist of the data is that Virginia spent more on promos at the start of its first football season (Sept. 2021) than it did at launch (Feb. 2021).
If North Carolina follows a similar pattern, we could see the state approach profitability in August before dipping back into the red for September and possibly October.
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