A Deutsche Bank analysis has found that while sports betting handle is up 15% in the four states it evaluated, the expansion has been fueled by smaller operator promotions with a 28% year-over-year increase that’s driving customers to play parlays.

Carlo Santarelli said in a note to investors that this combination implies promotions as a percentage of handle are up 44 basis points over 2023 in states measured: Pennsylvania, Michigan, Connecticut, and Kansas.

“At a high level, the fact that promotions are growing faster than handle is not the ideal dynamic, especially multiple football seasons post-launch for these states,” Santarelli said. “That being said, this dynamic is true at an industry level, but when one digs deeper, it is not entirely true at the company level.”

Both FanDuel and BetMGM have curbed promotions in these four states as a percentage of handle, while Caesars Entertainment promotions as a percentage of handle are essentially flat and remain well below peer reinvestment levels, Santarell said. In addition, Santarelli noted that DraftKings promotions as a percentage of handle are up year-over-year during the football season, but the increase is “relatively modest” when compared to the structural hold improvement by the operator. “As such, the bulk of the industry increase in promotions, as a percentage of handle, relates to the un-covered or smaller operators.”

While hold was sloppy in October, Santarelli believes this is broadly happening despite the increase in promotions as a percentage of handle. He noted that promotions and hold are linked.