DraftKings Inc. lowered its full-year outlook on Thursday after saying that it was making less money because its betting was losing money on games.
Plus NFL games lost DraftKings DKNG 2.95% of its value.
DraftKings CEO Jason Robins said, “NFL results early in the fourth quarter have dealt a $250 million hit to revenue and a $175 million hit to adjusted EBITDA.”
During the fourth quarter, he said, the company saw “the most customer-friendly stretch of NFL events we have ever seen.”
What does it mean for a result to be “customer-friendly”?
To make real-time odds for sports games, sportsbooks use a mix of big data sets, statistical models, what the public thinks, and research from experts.
Some casual bettors think that bookies set odds for a game to make sure that everyone bets the same amount on both teams and that they make a profit through their “commission.” But the truth is more complicated than that. When a popular team plays a less popular team, it’s hard to get the bets to be split fairly between the two teams.
As a result, sportsbooks change the odds to make it more appealing for bettors to bet on the other team as more bets are made on the popular team. This is done to control exposure. When there are different amounts of money bet on different teams, sportsbooks often favor one team.
There is a fee that bookies charge for every bet. This fee is called “vig,” and it means that even if they lose, they can still make money. Because of this, it is very uncommon for a casino to lose money for a long time. This NFL season, especially weeks 5 and 6, there have been times when teams that were supposed to lose did really well, giving casual fans a big win. That loss was too big for DraftKings’ vig to make up for.
During the Super Bowl earlier this year, sportsbooks also favored one team over the other because people bet different amounts on each team. It was clear that many banks liked the 49ers over the Chiefs because the Chiefs were getting a lot of bets. And because the Chiefs won, BetMGM MGM -2.60% and other bookies lost a lot of money.
When it comes to betting, the NFL is the best professional game because football is the most bet-on sport in the U.S. So, what patterns have been seen this NFL season that make it possible for the average bettor to beat the track book?
Robins didn’t name any games specifically, but casual bettors like to bet on favorites and “overs” on the number of points scored. This means that periods of time when favorites win are usually bad for casinos. An over bet is a bet that the total number of points scored by both teams in a game will be higher than the number of points that the sportsbook thinks will be scored.
Each of the favorite teams in week 6 of the NFL season went on to win. In week 5, NFL favorites won 11 of 14 games and went 10-4 against the spread. This made it a very bad week for many casinos.
The American Gaming Association says that $35 billion will be bet on the NFL this season. This would be a new amount of money.
Since the Supreme Court lifted the U.S. ban on sports betting in 2018, it’s been up to each state to make its own laws about it. 38 states in the U.S. now allow some kind of approved sports betting.
U.S. casinos got some good news from the election this year, which is why DraftKings made money. By a vote of 50.1% to 49.9%, Missouri voters passed Amendment 2, which changed the state constitution to make legal sports betting possible.
DraftKings lost $293.7 million, or 60 cents per share, in the third quarter. This is less than the $283.1 million it lost during the same time last year. In the past year, DraftKings Inc. stock has gone up about 14%.
