Arkansas Sees Record Handle After Sports Betting Expansion

The Natural State just saw its busiest sports betting month in history.

The Arkansas Racing and Gaming Commission announced the state saw over $100 million in wagers placed in April. It was the first time the southern market had topped the mark, thanks largely to the addition of DraftKings and FanDuel in late March. April was the first month both operators were live, and it led to historic results.

FanDuel led the way with over $53 million in bets, while DraftKings was second with over $35 million.

Market Expansion Pays Off

For years, Arkansas has struggled to generate the same tax revenue from sports betting as other legal betting markets. One big reason for that was a requirement for operators to hold 51% of revenue, which scared off the country’s top sportsbooks. As a result, the state featured only three sportsbooks for the first three years of legal betting:

• Betly - Southland Casino Racing
• BetSaracen - Saracen Casino Resort
• Oaklawn Sports - Oaklawn Casino Racing Resort

While the three sportsbooks remained fairly busy, they did not deliver the numbers the state had hoped to see. This led Arkansas to tweak its laws to attract larger operators, leading FanDuel and DraftKings to join. The former partnered with Oakalwn, while the latter joined Southland. BetSaracen remains active, though it's been left with a small sliver of market share.

Tax Revenue Hasn’t Spiked…Yet

While Arkansas just saw its largest monthly handle to date, it didn’t translate into much tax revenue. That’s due to FanDuel and DraftKings using promos and bonuses to build their user base in the new market. Operators can’t write those off, leaving very little actual revenue for the state to tax.

Below are the numbers from the last few months, courtesy of rg.org:

While this is disappointing for some lawmakers, most understand that this trend won’t last. The initial promos will begin to disappear, meaning a spike in tax revenue is likely coming this summer.

Arkansas does have one of the lowest tax rates in the country for mobile sportsbooks at 13%.

Rhode Island Could Learn From Arkansas

On the other side of the country, Rhode Island has also been looking at expanding its sports betting market. It has had an exclusive deal with IGT’s Sportsbook RI since 2019, but is looking to add several other operators over the next year.

While Bally’s has already scored the state’s second mobile sports betting license, only Rush Street Interactive applied. Despite the industry’s largest operators expressing interest in joining the market, Rhode Island’s 51% tax rate has prevented them from applying.

Arkansas's making changes to entice the country’s top two online sportsbooks is an example Rhode Island should follow. While the impact on tax revenue remains unknown, the massive spike in wagers shows the market is already growing fast. That should give lawmakers from Little Rhody plenty of reason to pay attention, and finally address its industry-leading tax rate.