The Oregon Lottery’s online sports betting platform is set to make significant losses in its first year of operations.
The Oregon State Lottery has released financial projections following a board meeting in January which predicts that the Lottery’s SBTech-powered sportsbook, Scoreboard, will lose more than $5m in the first nine months of the state’s fiscal year.
A memorandum addressed to the Oregon Lottery Board of Commissioners written by Oregon Lottery Director Barry Pack said: “As was reported at the January 30, 2020 Commission meeting, staff have been analyzing the Scoreboard program to finalize financial projections for FY ‘20.
“The process included examining contracts and reviewing expenses since inception and establishing revenue run-rates and based on actual results. The attached chart indicates that Lottery will have a loss of $5.3M from the program for the first nine months of FY ’20.”
Where is the money going?
According to figures attached to the memo, the Lottery expects Scoreboard’s gross receipts to amount to $178.3m for the year to 30 June 2020 and for gross gaming revenue to total $10.8m after bettors win $167.5m. According to figures released in June 2019, the Lottery suggested that it would generate $26.6m in revenue in the first year of legal betting in the state.
Direct expenses for Scoreboard include $6.2m on game vendor charges, $3.8m on advertising and $4,967 on sales support, which makes for a total of more than $10m in direct expenses. After direct expenses, the Lottery would see a gross profit of $785,479.
Indirect expenses amount to $6.1m which includes $3.9m on services and supplies, $1.6m on salaries and other employment costs, $471,931 on market research, $80,000 on public information and $2,464 on depreciation.
After considering expenses, the lottery expects to post a loss of $5.3m from Scoreboard for the year after it had been expected to post a net profit of $6.3m for the period.
Sports betting in Oregon
Prior to the passage of the professional and Amateur Sports Protection Act (PASPA), Oregon, Nevada, Montana and Delaware already offered a form of legal sports betting. The existing sports betting laws were ‘grandfathered’ in under PASPA allowing Oregon, and the other states, to continue to offer sports betting even after PASPA became law in 1992.
Oregon’s sports betting offering came in the form of its Sports Action parlay game which was shut down in 2007.
In June 2019, the Oregon Lottery inked a contract with SBTech to power the Lottery’s online and land-based sports betting products. The Lottery and SBTech launched the sports betting platform Scoreboard in October, a month later than initially expected.
Prior to the launch of Scoreboard, bettors in the state were limited to using the land-based sportsbook at the Chinook Winds Casino in Lincoln. The tribal casino launched sports betting in late August, and up until October, was the only legal sports betting option in the Beaver State.
The Lottery planned to begin the roll-out of its land-based betting kiosks in January, but the Lottery has yet to provide an update on when this will happen.