The Oregon Lottery has revealed that it expects to generate $141.2m in revenue over the first three years following the launch of its SBTech-powered retail and mobile sportsbook.
After formally signing a contract with SBTech earlier this month, the lottery aims to launch a mobile offering ahead of the National Football League (NFL) season in September, followed by retail betting kiosks early in 2020.
It has now published a series of revenue projections for the product, which estimates that total handle over the first three years in operation will amount to $1.6bn. This breaks down to $332.8m in the first year, rising to $555.9m in the second, then $722.3m after three years.
The lottery expects the bulk of handle to be returned to players as winnings. Customers are expected to win around $306.2m in year one, then $507.4m in the second year, and $656.2m in the third, totalling $1.5bn.
This will leave gross gaming revenue of $141.2m, starting at $26.6m in the first year of the contract. This, the lottery says, will rise to $48.5m in the second year, then $66.1m.
SBTech will receive a 19% share of GGR, which amounts to $26.8m over three years. This not only covers SBTech’s products and services, but also the cost of third party products and services used for hosting and data feeds, which will be paid for by the supplier.
Around half of GGR – $70.7m – will be swallowed up by additional expenses, to be covered by the lottery. These include potential data royalty and payment processing fees, as well as vendor costs for services such as know your customer (KYC), geolocation and other data feeds, marketing and promotional spend, staffing costs, hardware costs, and retail commissions.
This leaves a net profit of $43.7m, or around 31% of GGR. The Oregon Lottery expects a profit of $6.3m for the first year of the sportsbook’s operation, rising to $13.9m, then $23.4m.
The launch of sports wagering will be accompanied by the relaunch of Sports Action, a parlay betting game that was first launched in 1989, then discontinued in 2007. The lottery has revealed that it plans to reintroduce the game, from which it expects to generate revenue in the region of $10.3m.