🔒Despite some hiccups, CT has reaped the financial benefits of legalized sports betting

Nearly $5 billion.

That’s approximately how much money has been wagered in Connecticut since retail sports betting became legal here on Sept. 30, 2021, followed by online sports gambling about two weeks later.

In the three years since, the state has had its share of wins and losses. The losses have included unexpectedly having to change the vendor operating its retail and online sports-betting operations; the abrupt closing of a retail betting venue; and the rough first year for its sportsbook at the XL Center in downtown Hartford.

As for the wins, well, like anything surrounding gambling, it’s all about the money. And the financial numbers suggest the state has done quite well to this point.

Since its inception, wagering on sports has produced nearly $383 million in revenue for operators, and more than $52.7 million in payments to the state General Fund, according to the Department of Consumer Protection.

The General Fund payments are more than 2.5 times the $19.3 million that was projected by the Office of Fiscal Analysis for the first year of the program.

By comparison, though, payments to the state budget from online casino gaming — which also became legal in Sept. 2021 — have totaled nearly $160 million, so there is still room for growth.

Officials with the Connecticut Lottery Corp., Capital Region Development Authority (CRDA) and Mohegan Sun casino all said they believe the state’s sports betting results have been good, and they expect them to continue to improve with time.

“We’re kind of still in the first inning as far as legalized sports betting in the state,” said Andrew Walter, director of sports betting for the Connecticut Lottery Corp.

Calling an audible

Walter said there are still consumers in the state who aren’t aware they can now legally bet on sporting events.

“Like any new product, there continues to be new customers realizing that this is available to them,” Walter said.

Under state law, 13.75% of net profits from sports betting are paid into the General Fund by all the approved vendors, which now include Fanatics Sportsbook, DraftKings Sportsbook and FanDuel Sportsbook.

“If you look at the monthly payments, it has been good for the state,” Walter said.

He admits, though, it could have been even better if not for losing the state’s original bookmaker, Chicago-based Rush Street Interactive. The company announced in March 2023 that it decided to exit the market because it wasn’t profitable enough.

“Switching the operators was a significant disruption last year,” Walter said. “So, with any new business, it’s easy to look back and say we should have done a better job in picking the operator. But looking at the bids we received, it was a fine decision. It just didn’t work out.”

It took until December 2023 for the state to name a replacement. Following a request for proposals, it selected New York-based Fanatics Betting and Gaming, which signed an eight-year contract.

The time between announcing Rush Street’s decision to exit and the hiring of Fanatics affected marketing efforts, among other things, Walter said.

“Essentially, we restarted at the end of last year,” he said. “We’ve seen very good growth with Fanatics. Not only is the market increasing, but from a lottery/Fanatics standpoint, we’re expanding because of their online presence.”

He conceded, however, that competition is fierce.

“The industry has learned that it is very hard to compete with DraftKings and FanDuel, whether there are three or 25 operators in the state,” he said. “Those two companies have the lion share of total sales in every single state they operate in.”

Learning curve

While online and mobile gambling continue to grow, the state’s effort to grow its retail sports betting operations has been a mixed bag.

For example, the state lottery announced in September 2022 that Arooga’s Grill House and Sports Bar in Shelton would become a retail gambling location. After Rush Street’s exit, the restaurant and bar became a Fanatics Sportsbook location in December 2023.

Just two months later, however, Arooga’s abruptly closed.

Similarly, Fanatics Sportsbook restaurant and bar at the XL Center opened in September 2023 and struggled to find its footing in year one.

According to CRDA Executive Director Michael Freimuth, the venue ended the fiscal year with a loss around $500,000.

Freimuth cited the change in vendors from Rush Street to Fanatics as having a detrimental effect.

“There was a change in vendor around December, so we’re not yet at a full-year with the new operator,” he said. “It’s hard to compare what the annual beast is going to be. We’re still trying to learn our way through this.”

Freimuth said the venue, located on the Ann Uccello Street side of the XL Center, has gone through operational changes, “both on the food and beverage side and the operating hours,” to better meet the fluctuating demand.

“The sportsbook does very well during events,” he said. “When we have an event, you can’t get into the building sideways. But during the day, it’s very slow.”

Still, he said, gaming revenue was up in September from a year earlier, “so that’s positive.”

For September 2024, Walter said, the XL Center sportsbook had “unofficial and unaudited sales of roughly $460,000.”

As is typical for many sportsbook venues, the NFL season, “March Madness” NCAA basketball tournament and NBA playoffs in May and June boost gambling.

“But the day-to-day, 365-day volume of people isn’t high enough to help (the venue) break even,” Freimuth said.

Among the operational changes that have been made to address that, the venue reduced staff, adjusted its menu, and shortened its hours during the summer. It is now back to an 11 a.m. to 10 p.m. schedule, though it will stay open later depending “on when games end,” Freimuth said.

“Just getting through the year to understand year-to-year comparables allows us to make smarter decisions going forward,” he said.

Walter said the lottery hopes to establish more retail sports betting sites, and has “one project we have signed an agreement on” that is not in an arena, though he declined to disclose the location.

“We anticipate it being open before the end of this calendar year,” he said.

Both Norwalk and Danbury, the state’s sixth- and seventh-largest cities by population, are possible locations for future venues, as is the state’s northeastern “Quiet Corner,” he said.

A 'win-win'

The possibility of more state-operated sportsbook locations does not concern Jeff Hamilton, president and general manager of the Mohegan Sun casino and resort in Uncasville.

Approving sports wagering in Connecticut required the state to adjust its gambling compact with the Native American tribes that operate Mohegan Sun and Foxwoods. The result meant both casinos could also offer sports betting.

“It’s definitely been beneficial,” Hamilton said. “It’s added, really, another aspect to our business. It’s a great amenity to have. It really drives special events and drives additional people to the property.”

For the third quarter of 2024, ended June 30, Mohegan announced the highest quarterly net revenues in its history of $504 million, up 21.4% from a year earlier. It attributed the results in part to its digital gaming.

The casino has partnered with FanDuel from the start, offering a sportsbook on-site that Hamilton says is the best in the state.

“We really feel strongly that if you want a great place to watch and bet on sports, then Mohegan Sun is the premier place in the state,” he said, noting that it features a 140-foot video wall and 39 betting kiosks.

Hamilton added that the casino also sees room for growth.

“I think there’s definitely opportunities to do more events, more things that drive people to the property,” he said. “I think, obviously, there’s going to be new sports bettors and people that are coming here for the first time. So, there’s always opportunity for growth.”