Winning Bets Costing Sportsbooks Millions Of DollarsCompanies Adjust Revenue Forecasts Following Losses |
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Winning football bettors are having a financial impact on some of the country’s largest sportsbooks and two major operators have revised revenue expectations through the end of the year because of the nice run by gamblers.
DraftKings and FanDuel parent company Flutter Entertainment have been seeing NFL favorites win big for bettors in recent weeks and that has wreaked havoc on the two companies’ attempts to minimize the risks of fielding bets.
Adjusting Revenue
Flutter has slashed revenue projections for the remainder of the year by $50 million after some rough weeks, including the second Sunday of October that saw 11 of the 13 favorites win. DraftKings also adjusted the company’s annual revenue projections by $250 million.
DraftKings CEO Jason Robins recently noted that the company “experienced the most customer friendly stretch of NFL sport outcomes we have ever seen.”
Other sportsbooks were probably affected by the winning bets as well. The Wall Street Journal reports that for NFL games the week of Oct. 28, the books’ hold rate was 2%. The hold rate is the amount of money collected by the house after all winning bets are paid and all losing bets collected. By contrast, the industry has a long-term average of 9% for NFL games.
Despite the recent losses, insiders and sportsbook management still expect the industry to grow in the coming years and operators have experienced profits in recent quarters. Robins noted that “these impacts will become more rounding errors.”
The volatility in revenue comes after sports betting, including the ability to wager online, has helped lead to record U.S. gaming revenue this year. The U.S. Supreme Court overturned a virtual ban on sports betting outside Nevada in 2018 and the country has seen rapid expansion with 39 states including Washington D.C. and Puerto Rico now allowing some form of betting.
Missouri is the latest of those, after voters approved a ballot initiative this month legalizing wagering on sports.
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