How Casinos Make Money on Sports Betting

The world of sports betting is a lucrative one, thanks in part to the many US states that have made it legal. According to the New York Times, the legal sports betting market is valued at around $13 billion a year. This makes it the fifth largest gambling market in the world, and one that is growing steadily.

Although it is widely available, legal sports betting mostly operates within well-established sports leagues and organizations. However, this could all be changing, as new technological developments have made online betting and daily fantasy sports more accessible to the common person. Let’s take a closer look at how casinos make money on sports betting.

Licensing And Operating Limitations

Since the majority of legal sports betting takes place in the US, it makes sense that the majority of the casinos that participate in this market are based there as well. Interestingly, most casinos that offer sports betting are actually franchises of larger operations. For example, the Golden Nugget, which is a luxury casino in downtown Las Vegas, has 44 restaurants and 25,000 employees, yet it only operates two betting venues within the city limits. It primarily licenses its brand for casinos that offer sports betting in other parts of the country.

The fact that most casinos opt to stick with more traditional gambling operations might also be attributed to the limitations that come with operating within the sports world. It is not uncommon for casinos to find themselves in legal trouble due to the nature of their business. Just this year, the NBA, MLB, and NHL all filed lawsuits against the Casino Resort in Mississippi due to allegations of bribery and corruption. This, of course, is a sensitive area of sports and the legal system, and it is entirely possible that the outcome of these cases will have major ramifications for sports betting in general.

Profits And Revenue

Assuming that the outcome of legal cases related to sports betting are in the favor of the casinos, it is possible that the profits from this business will rise exponentially. It is not hard to fathom why major corporations like Caesars, which owns the Golden Nugget, have decided to get into the game. From an economic perspective, this is a no-brainer. While the sports betting market is still relatively small, it represents a massive potential pool of customers. If they can convert even a small percentage of these customers into paying and returning customers, this will result in significant financial gain.

That being said, the majority of profits that casinos make from sports betting come from management fees and commissions, rather than from winning at the game. In most cases, casinos have to pay a number of fees to leagues and organizations in order to get the right to offer their services. Additionally, sportsbooks often charge high fees to organizations that want to host games at their venues. In some instances, they will even charge the police for searching for gamblers that have allegedly broken the law.

Although it is unlikely that legal sports betting will ever become mainstream in the United States, it is important to keep in mind that the majority of people that participate in this market do so within the confines of states that have legalized it. For the time being, at least, it appears that the world of sports betting is a gamble that casinos are willing to take, especially since it is likely to generate significant profits in the long run.