You don’t have to be a sports betting aficionado to understand that, at the end of the day, every half-decent sportsbook will make a great deal of money.
Their business model is predicated on the fact that users will look to bet sums of money on all manner of events and games, and the vast majority of those bets are lost; that’s just the very nature of gambling. If it were any different, there would be no sportsbooks out there.
So how much money do they actually make?
Well, let’s look at New York as an example. The state legalized sports betting in January 2022, and recent reports suggest that bettors in the region wagered over $16 billion via mobile and desktop, and that led to the sportsbooks generating a profit of in excess of $1.4 billion, and that’s just one state over the course of one year.
The amount they secured in revenue is actually less than you might expect, but you do have to factor in that sportsbooks in New York are paying 51% in tax, so the authorities in the Empire State are most definitely coming out on top by boosting their coffers from the legalization in the area.
Forecasters believe interest in sports betting is going to continue to grow in the United States, with estimates that the industry would secure revenue in the region of $12.1 billion to $17.7 billion by 2025.
Often companies in this space will look at the value of a customer in terms of the, as they’d put in, cost of acquisition against the length of time it would take to secure that sum, and more, from a player.
This point is echoed by Mike Raffensperger, CMO of FanDuel, one of the most prominent players in the market;
“We have really ambitious targets for our business across the long term,” he said. “We are really mindful of the unit economics of our business. Fundamentally, that’s what it comes down to: What is our cost of acquisition and during what period is it paying back?”