US online sports betting volumes showed uneven movement through February and March, as the market continues to adjust to prior-year comparatives and shifting player behaviour.
Stifel has released its March US Online Gambling Tracker, prepared by Jeffrey Stantial and other Stifel analysts. They explain that the US online gambling market experienced a period of erratic performance during recent months.
February handle rose about 2% year-on-year, although same-state performance remained flat when excluding newly launched markets.
That modest recovery followed declines recorded in December and January, when unfavourable sporting outcomes suppressed recycling and reduced betting churn.
By March, early reporting states indicated handle contraction of roughly 3% year-on-year, with month-over-month figures also weakening as tougher comparatives emerged.
GGR told a different story, however, rising sharply in March despite softer handle, driven by improved operator hold rates nearing 9.6%.
February revenue had declined by approximately 4%, with a lower hold rate of 9.5% weighing on returns despite stable betting activity.
Competition among leading operators changed throughout the period, with DraftKings and Fanatics taking up more market share.
Both companies recorded year-on-year growth in February, whereas FanDuel recorded a drop in revenue, which was linked to poor promotional strategy execution.
FanDuel’s market share fell roughly four percentage points year-on-year, although early March indicators suggested some stabilisation following increased marketing activity.
Meanwhile, DraftKings’ growth moderated slightly as the company adopted stricter promotional discipline during the March Madness cycle.
Prediction markets continue to chip away
Prediction markets continued expanding at a faster pace than regulated sportsbooks, with Kalshi reporting $10.4bn in February trading volumes and $13.1bn in March.
That sequential increase, including a 25% monthly rise in March, exceeded typical seasonal patterns seen in traditional betting volumes.
Parlay-style combinations gained traction within those markets, accounting for about 20% of notional trading volume during the latter part of March.
This move towards multi-leg bets is in line with industry-wide trends, where parlays create better margins for operators.
Promotional reinvestment across the sector declined, with operators allocating between 2% and 4% of handle in February, down around 80 basis points annually.
The reduction reflects a shift towards profitability, though reported figures remain inconsistent due to differing accounting practices across states.
Regulatory signals also introduced uncertainty for prediction markets, particularly following guidance suggesting player proposition bets may be excluded from permitted event contracts.
Such a move would narrow the available product set and potentially constrain future market expansion.
Separately, Wisconsin authorised online sports betting under a tribal-led model, adding incremental capacity to the national market without materially altering overall scale.
iCasino remains significant factor
In the iCasino segment, growth remained more stable, with February GGR rising approximately 20% year-on-year across the US market.
That performance aligned with recent rolling averages, indicating steadier demand relative to sports betting volatility.
State-level data showed mixed competitive dynamics, with FanDuel and BetMGM gaining share in Michigan while New Jersey figures indicated largely unchanged positioning.
Promotional reinvestment within iCasino also declined, with Pennsylvania reporting a reduction of around 140 basis points year-on-year.
Across both verticals, operators appear increasingly focused on margin discipline, as handle growth remains inconsistent and shaped by external sporting outcomes.
Stifel analysts currently favour Sportradar as a preferred way to navigate the sector. They see potential upside through iCasino content rollouts and synergies with IMG.
They also believe that Wisconsin’s legalisation will provide a much-needed boost to consensus predictions.
As a result, Stifel maintains a long-term “Buy” rating for Flutter and DraftKings due to “overblown prediction markets risk and scale advantages offsetting softer handle trends and tax hike risk.”