Sports betting off to a good start at casinos, but no state revenue

Photo of Julia Bergman

Crowds at the casinos during football games are proving that Gov. Ned Lamont was on target with his sharp focus on the start of the NFL season to usher in the new sports industry in Connecticut.

While the state didn’t meet that target, the kick-off of in-person betting last week, just three days before the matchup between the New England Patriots and Tom Brady’s Tampa Bay Buccaneers, brought beefy crowds to the state’s two tribal casinos over the weekend.

Baseball playoffs, including the Red Sox-Yankees wild card game that the Red Sox won Tuesday night, have attracted smaller crowds, but they still represent a bump in attendance at the casinos.

As for state coffers — Connecticut won’t get a cut of that sports betting revenue at the casinos. Not a dime of it.

Under the new Connecticut gaming law, sports bets placed on tribal reservations, like in-person bets on table games, aren’t taxed. The state will collect 13.75 percent of revenue for online sports betting once the websites of Mohegan Sun and Foxwoods Resort casinos are up and running.

Revenue from the Connecticut Lottery Corp’s retail and online sports betting sites will not be taxed, because the lottery, as a quasi-public agency, transfers all its revenue to the state’s general fund after expenses.

Online platforms for sports betting are expected to go live Tuesday, starting with a soft launch available to a limited number of users selected by the fantasy sports companies that have partnered with the tribes and the lottery. The state Department of Consumer Protection announced the soft launch date in a Friday afternoon news release.

Online, non-sports casino games, which are part of the 2021 expansion, will be taxed at a rate of 18 percent of revenue, rising to 20 percent after five years. Those systems and approvals are still in the works with no targeted start date.

Tribal and casino officials wouldn’t disclose how much revenue sports betting generated in its first week, or how many bets were placed, but pointed to strong volumes so far.

“Performance has been better than expected, with Sunday being especially strong,” Jeff Hamilton, president and general manager at Mohegan Sun, said in a written statement.

Mashantucket Pequots tribal chairman Rodney Butler, in an interview, said he was “very pleased with the volume of bets” placed over the weekend at Foxwoods, which the tribe owns, given it happened during soft launch period before the casino has ramped up its marketing.

While football was a big draw last weekend, that was not the case for baseball games during the week. Even the highly anticipated New York Yankees-Boston Red Sox American League wild card game did not bring crowds to the betting kiosks.

“Football is 1, 2 and 3,” said Butler, a former defensive back for the University of Connecticut, adding that baseball is “slow and steady” because there’s so many games.

And, in the often-said words of Yankees announcer John Sterling, “you can’t predict baseball.”

At Mohegan Sun, one person was at the two rows of betting kiosks at the moment when the first pitch was thrown at Tuesday’s Yankees-Red Sox game, a few feet away from Bow & Arrow Sports Bar. A crowd gathred in the bar, many of them Yankees fans.

An employee helping patrons place bets on the kiosks said people had lined up hours ahead of the Pats-Bucs matchup to bet on the game.

Ahead of the Yankees-Red Sox game, large screens mounted high on the walls and the two dozen or so betting kiosks showed the Bronx Bombers were the slight favorites to win. At game time, a $30 bet on the Red Sox paid $63, including the original wager. Payoffs for Yankees bets were lower.

The Red Sox beat the Yankees 6-2.

The Mashantuckets and Mohegans got an early start on in-person sports betting, taking wagers ahead of the Connecticut Lottery Corp, which is still awaiting approval from DCP to launch its retail sites — giving the tribes a slight edge.

“Initially, we’ll get some decent volume because there’s no other options in the state,”Butler said. “But once they get their other locations, especially the key ones in Stamford, Bridgeport and Hartford, I think those will do pretty good volumes for the state.”

What will set the casinos apart, he said, is the experience factor. Foxwoods plans to open its permanent sportsbook in mid-November.

“That will be a sight to see. It’s like sensory overload,” Butler said. “We’ll drive volume based off that entertainment value were creating.”

But ultimately, he expects most gamblers will choose the convenience of making wagers online.

“The reality is once you get online with sports betting, and in particular, internet casino, that will be a much more profitable venture, but still will pale in comparison to the numbers that you see that we report to the state on our slot handle,” Butler said.

The casinos contribute 25 percent of total slot revenue to the state’s general fund per tribal contracts with the state. Foxwoods reported slot revenue of $30.8 million in August, the most recent data available, resulting in a $7.7 million payment to the state. Mohegan reported $43.7 million, paying $10.9 million to the state.

The expansion of gaming, which is expected to yield nearly $30 million in revenue to the state after the first year with hopes of that growing to $100 million after several years, comes as both casinos continue to recover from the pandemic, which led to declines in business.

“It’s a dirty little secret in sports betting. It’s a very low-margin business. There are states that have lost money in certain months in sports betting and operators have lost money,” Butler said.