With Scoreboard Now Profitable, Oregon Lottery Commission Eyes Changes

Posted on April 5, 2021

One of the usual motivations for regulating sports betting is creating a new source of income for state agencies and services. To make that happen, however, it’s kind of important for that income to exceed expenses.

Revenue from the Oregon Lottery Scoreboard betting app just eclipsed that threshold.

It’s been a year and a half since the online sportsbook launched in the Beaver State. Yet the lottery has just now collected enough income from it to equal the cost of its introduction.

And in an effort to make the platform more profitable, the lottery commission is considering a big procedural change.

Scoreboard revenue finally on level with startup, operational costs

In the lottery commission’s March 26 meeting, members shared the latest financials from Scoreboard. Barry Pack, executive director of the Oregon Lottery, spoke about Scoreboard’s status with the full commission.

“Scoreboard has turned a profit and we have recovered all of our original startup costs and are generating net lottery proceeds from the gaming,” Pack said. “Which is great news, given all the challenges of the pandemic in this time period.”

Pack then went on to make a suggestion to the commission on how to make the platform more profitable in the future. Essentially, Pack wants the lottery to “buy insurance” against having to pay out winnings on big bets.

“My recommendation to the commission is that we set aside $1 million in reserve, an initial reserve amount, and we monitor prize volatility over the months ahead and then evaluate whether that is a sufficient reserve, needs to be increased or decreased based on risk and experience. And then remaining net lottery proceeds would transfer in April with the other lottery transfers in a normal schedule. Then beginning next fiscal year, Scoreboard transfers, again to hedge against volatility a little bit, we will transfer those every six months.”

In clearer terms, that means the lottery would delay paying all relevant proceeds to the state to fund this reserve. If a bettor hits on a longshot wager or Scoreboard takes a big bet that it loses, the lottery can dip into that reserve to offset that cost.

Should that not occur, the lottery will then release the funds to the state on a deferred basis. This is significant because it compounds the already existing issue of the state not seeing returns from legal sports betting. The intentional delay adds to Scoreboard’s slow growth.

SBTech contract still plagues Scoreboard

A big part of the reason why it took about 18 months to recover startup costs is that Scoreboard’s operator, SBTech, got a sweetheart deal. For example, the state took a loss of $2 million over Scoreboard’s first five months of operation. During that time, SBTech got part of nearly $3 million in payments to vendors.

Even if the revenue sharing was more equitable, the contract has other diminishing effects. The exclusivity of the contract makes SBTech’s product the only legal online sportsbook in the state. Additionally, the lottery’s decision to not offer any markets on college sports compounds that issue.

To give context to this situation, handle came to $29.6 million in February 2021. Revenue for the same month hit its lowest point since Scoreboard launched at just $2.68 million. With about a million fewer people and no professional sports teams within the state’s borders, Iowa sportsbooks did $149.5 million in handle and held over $7.7 million in the same month.

Why that huge disparity? Among other reasons, Iowa bettors have access to nine different online sports betting sites. While legal sportsbooks in other states cashed in on the end of the NCAA basketball season, Scoreboard could not capitalize on that opportunity.

The lack of competitors also has given SBTech zero reason to offer competitive odds and promotions through Scoreboard. With little incentive to change, it’s understandable why many Oregonians may have resisted switching over from betting with illegal bookies or offshore websites.

Help might be on the way for Oregon bettors, though.

Could a rebrand help improve the bottom line for the lottery?

Earlier this year, Pack shared that the lottery is in talks with DraftKings for the company to take over Scoreboard operations. In reality, it would be more of a shift than a complete makeover. DraftKings bought SBTech last year.

DraftKings Sportsbook offers a pretty similar product across the board in all of its sports betting markets, as local regulations allow. That might mean markets on college sports, as there’s no law against betting on college sports in Oregon. The lottery simply decided not to offer those bets.

It could also mean Oregonians could get in on the competitive and frequent promotions that DraftKings offers. For instance, new DraftKings customers can currently take advantage of a Bet $1, Win $100 for the opening month of MLB games.

Hopefully, it won’t take another 18 months for the lottery to turn a significant profit off sports betting.

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Derek Helling

Derek Helling is a freelance journalist who resides in Kansas City, Mo. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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