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Actually, quite a few books hold well over 5%, due to all the parlay bets being made by the public. But it's still a loss leader!
By loss leader, I'm referring to what the casino needs to earn to justify the use of the allocated space. By the time you add in the substantial labor and equipment costs (all those plasma TVs!), you're really eating away at that revenue. But it's really more about what you could have made just by putting slot machines in the space. Yes, you have to buy the machines, but slots don't call in sick, require very little labor, and don't really have any variance -- you make your $100-$400/day with no real risk.
Sharp casinos understand the limitations of the sports book as a moneymaker, but they also understand how the book brings in customers. While the casino may earn a mere $5 theoretical hold on a husband who bets $110 and gets free drinks while he watches MNF in the book, the wife is playing slots for three hours (or going to the shops). Then they might meet friends for dinner.
A sports book also helps give a casino "character" and brings in energy during all big sporting events. Can you imagine a Super Bowl without a sports book? Having said this, the most elegant casinos do have a Catch 22. They like that sports bettors and poker players bring in business, but they aren't all that thrilled with the caliber of all the customers that encompasses (cursing loudly when their team loses, and so forth).
The best evidence of the value of sports books is on display at Wynn Las Vegas. The Wynn has a beautiful boutique book-well run and tucked into the casual area of the casino, next to the less-expensive restaurants and the Poker Room. Steve Wynn understands this business: Bring in the poker players and sports bettors, but keep them away from the high rollers. By positioning the book and the poker room away from the higher-end areas, you have the perfect design. I don't think it's an accident that the parking garage is next to the poker room and sports book at the Wynn -- Tower Suite guests don't park in the garage, and hence, don't have to walk past those lower-rent areas.
Further, Wynn understood that he didn't need a second sports book in Encore (or a second poker room). By having connecting walkways through his shopping area, Encore visitors have access to both venues, but Encore itself doesn't need them and the relatively low revenue they would generate.
Given all this, a key question is, "OK, if sports books are loss leaders, how do companies like Cantor Gaming and Leroy's make money? All they do is take sports bets." The answer is that prior to 2010, they really didn't make much. It's true they have the advantage of key economies of scale. Leroy's had 60 or so outlets, with no management on most sites (just ticket writers), and all the key decisions being made offsite. They were also moving to a model where many of the remote locations offered kiosk-betting only (Golden Gate, etc). Leroy's was turning sports books into slot machines!
These days the books are really counting on their betting applications to allow wagering from phones and at home in Nevada. Steee-rike! Now they aren't just running a sports book, they have a business where everyone anywhere in Nevada can wager from their phones or their tablets.
I can't emphasize enough how much sharper a book like Cantor (which is fully focused on sports betting) is than most Vegas books (whose focus is in other places). One long-time director said it best: "The suits upstairs want us to be entertainment directors, keep the key customers happy, and never F*** up and lose big on any weekend." I'm guessing this director would love to be with a high-level risk-management group like Cantor, whose handle will be ten times that of a comparable property over any given period of time. But instead of holding 10%, they'll hold 1.5%. That's 50% more revenue and it's a model that can be profitable, as the original question suggests, but it comes with a whole lotta risk.
