How Do Sports Betting Companies Make Money? Simple Analysis

Sports betting is booming — and that’s an understatement.

From the US to Asia, people can’t get enough of sports betting. Not only is it a lot of fun, but it also provides fans and friend groups with a platform for socialising. Now, no matter which sport game you attend or watch in a bar, the people there will be talking about the bets they’ve placed. Simply put, it’s part of the culture.

Although sports betting has always been popular, the significant growth of the industry over recent years has left the world with one question on its mind: how do sports betting companies make money? After all, it seems like everybody is winning all of the time, so it doesn’t make much sense.

If you’re also confused about this, you’ll be happy to know that this simple analysis is how to explain how sports betting companies make money and keep fans coming back for more. By the end, it’ll all make sense.

Let’s begin.

How Sports Betting Companies Make Money: Explained

The Sports Betting “Vig”

The main way that sports betting companies are able to make money is through the “vig”.

Not many people know this, so we’ll let you in on an industry secret. Whenever you place a sports bet, the company will charge a very small fee (vig) to accept the wager. Normally, this will be under 5%, which is a pretty standard juice line. However, even though it’s only a small amount, this enables sports betting companies to make some serious money, as it’s something that not many players know about or recognize when they look at their betting statements.

If you’re wondering why sportsbooks do this, it’s easy to understand. All sports companies have the same aim, which is to make a profit. By giving themselves a house edge through the vig, it gives them a greater shot at making healthy annual profits.

Withdrawal and Deposit Charges

On top of this, most sportsbooks also charge small fees for withdrawals and deposits. Again, this is smart, as it enables them to keep revenue levels high without putting players off. For example, if a sports betting charges a 1% withdrawal fee, this isn’t going to bother the average player. Throughout the calendar year, though, these withdrawal fees add up to huge amounts of money for the sportsbooks, which is why some charge as high as 5% for both withdrawals and deposits.

Parlay Bets

Parlays are incredibly popular in the sports betting world, right now.

They’ve become so popular that parlays have been a huge revenue driver for sports betting companies, including the likes of ESPN Bet and DraftKings.

Now, whenever there’s a big game, you can guarantee that sports fans on X are tweeting about the parlay bets they’ve placed.

A parlay bet is when you place a single wager on the outcome of multiple events. For example, if you’re an NBA fan, you might bet $10 on the Celtics to beat the Bucks, the 76ers to beat the Bulls, and the Wizards to beat the Hornets. The logic behind a parlay bet is that (if all of the outcomes come true) you win a lot more money.

It’s important to highlight that parlays don’t always run smoothly due to how profitable they can be for the player. In some cases, sportsbooks will reject parlays or ban them entirely, which is worth keeping in mind.

Who Are The Biggest Sports Betting Companies

The sports betting market is more popular than ever. As you would expect, this has led to the launch of countless sports betting companies. Which are the biggest? Here’s an overview:

• DraftKings
• FanDuel
• BetMGM
• bet365
• Caesars Sportsbook
• ESPN Bet

If you’re looking for a sportsbook to join, these are all great options. Remember, there are also other smaller (and lesser known) sportsbooks out there, too. Whichever sportsbook you join, gamble responsibly.