Are sports books really loss leaders for the casino?

I read an article that claims that sports books are loss leaders for the casinos. Is that really true? The books rake like 5% of all bets, a lot of money. Over the long haul, that's a much bigger edge than blackjack or most table games. I can't see how the sports books couldn't be profitable in the long run. Can you explain?

Well, we wouldn't call sports book loss leaders for the casinos. They are profitable and quite a few books hold well over 5%, due to all the sucker bets made by the public.

That said, they're not nearly as profitable as slots or table games. They do make money, though the margins are thinner than usual for the casinos.

One of the most important criteria is 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, you're really eating away at the revenue. Compare that to putting slot machines in the space. Yes, you have to buy or lease the machines, but slots typically hold at least what the sports book does, require very little labor, don't get health benefits or call in sick, and don't have all that much variance -- the casino makes its $100-$400/day with very little risk.

So why do casinos offer sports books anyway?

Even with the lower margins, sports books serve other strategic purposes. These days, they sell space (seats, tables, VIP experiences), offer food in the books, and make big bucks on VIPs. Big games, of course, draw crowds, and people who come to bet and/or attend parties might also gamble in the casino, eat at the restaurants, and stay at the hotel. There's also cross-selling potential, for example, casino promos that piggyback on the action in the book. Customer loyalty is certainly a factor; gamblers who like to bet sports will frequent the casino with their favorite book.

You didn't ask, but all this begs the question, what about sports book companies like FanDuel and DraftKings? Most of what they do is take sports bets. How do they make money?

Online and mobile sports books tend to be more profitable due to lower overhead costs. That’s why many traditional casinos are investing heavily in their digital platforms.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

Have a question that hasn't been answered? Email us with your suggestion.

Missed a Question of the Day?

Have a Question?

Tomorrow's Question

Has Clark County ever considered legalizing prostitution?

Comments

Donzack Apr-21-2025

The start

Do sports books operate the same today as they did in the beginning? Structure, profit etc.

Bob Nelson Apr-21-2025

Amount wagered is another factor

LVA has pointed this out before, surprised they didn't mention it.  A fairly typical sports bettor might bet $100 on their team and another $100 on the over/under and sit and watch the game for 3 hours.  A $10 blackjack player playing for 3 hours could easily wager $2k-3k in that same time.

Randall Ward Apr-21-2025

profits

discussed a lot here in OK, tribes want it but the profits not that big.  Lots of time spent on people like me making little bets and asking lots of questions.

King of the Bovines Apr-21-2025

There are many ways to skin a cat

In a perfect world, every casino would have nothing but slotachines as far as the eye can see, and every gambler would be happy with that setup.

Because on a square footage basis, slots are the easiest way to make a bunch of money.

Believe it or not, gamblers are not all alike.  What works one one may not work as well on another.

I think a variation of the 80/20 rule applies - 80 percent of the customers can be skinned with one tool. 

So some casinos will try to attract different kinds of gamblers, and maybe even get some cross foot traffic so they can get more bang for their buck on different tools.

And if you're in the business of cat-skinning, you can get by with just one set of tools.  But sometimes you need different tools to be more efficient in the process.

Question of the Day - 21 April 2025

Comments