In 2023, U.S. sports betting generated $10.92 billion; that's a 44.5% jump from last year’s total. A jump fueled by rigged odds, predatory advertising, addiction, and mobilized use has pushed the already large market to an even higher level.
How do Sports Betting Casinos Make Money?
While oddsmakers work around the clock to create the most accurate betting lines, the main way these companies generate profit is through something called “vigorish” or "vig." A vig is a charge paid for each bet placed. Unlike a transaction fee you may see on eBay, in sports betting, a vig is not added at checkout but instead included in the odds from the very start.
Here is a quick example of a Vig in action:
John is betting on the coin flip in the super bowl; the probability of heads is 50% and tails is 50%, meaning, theoretically, if he bet 100 dollars and won, he would have 200 dollars.
In reality, when John enters a bet for 100 dollars on heads; the sportsbook states, "-110 odds to pay out 190"; this means that in the case of a win, John takes home $190 and immediately loses 5% or $10.
This is one of the key components behind the phrase “The House Always Wins." Even if a sportsbook loses to a big winner every once in a while, money from “the vig” will quickly fill in any holes in their wallet.
Predatory Advertising
The concept of a “risk-free” or “no-sweat” bet is one of great controversy. These bets aren't “risk-free," and in fact, regulators in Ohio and Massachusetts have banned the term due to its fugazi nature.
During some promotions, risk-free bets of up to $7,500 are offered. As grandma always says, if something seems too good to be true, it probably is.
Here’s how it works:
After entering the promotion, to claim the risk-free bet, the bettor must deposit up to the same amount of money as the promotion describes (for example, $5,000).
If the bettor continues, and per say deposits $5,000, bets can be placed freely; if the bettor loses that $5,000, they will be refunded with $5,000 back in bonus bets.
Here's the catch: by depositing $5,000 and losing it, the bettor is not refunded in cash but in the form of bonus bets. They cannot just withdraw their $5,000; in fact, almost all casinos make bettors play through their bonus bet before they can withdraw it. This means the bettor's money is locked in the casino; that same money that once seemed risk-free must be gambled for the chance of getting it back.
The "utopian" half-time commercials on TV have a much darker truth than kindly giving out free money: getting the bettor on the platform and keeping them hooked.
Conclusion
As restrictions continue to lessen on sports gambling and as the number of states that have legalized it grows, it is extremely important to understand how the companies exploit their users for profit. In an age of flashing lights and blinking numbers, looking forward, it will be interesting to see how the industry evolves and grows with the increasingly online world that is the twenty-first century.
Works Cited
“US sports betting revenue in 2023 hit a new record — but there's even more growth to come.” thestreet.com, 21 February. 20224, https://www.thestreet.com/sports/us-sports-betting-revenue-2023-hits-record
“Concerned about betting’s inherent dangers, NBA to ban ‘risk free’ advertising.” sportsbusinessjournal.com, 6 February. 2023, https://www.sportsbusinessjournal.com/Journal/Issues/2023/02/06/Upfront/betting.aspx#:~:text=The%20decision%20follows%20a%20trend,Massachusetts%20have%20banned%20the%20term
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