Americans have found a creative new way of losing money at sports betting. They’re losing with such regularity that they’re catapulting gambling apps to profitability well ahead of schedule.
Parlay bets, which allow people to wager on several things happening together, have taken off in popularity this year. Instead of simply gambling on the winner of a game, bettors can wrap predictions for every game on the schedule into one bet, or create custom wagers that their favorite quarterback will throw three touchdowns and the defense will sack the other quarterback twice. Sports-betting websites and apps are now offering thousands of bets a day and combining the outcomes of several sporting events together into megabets that could cover four years of college tuition if they pay off. They hardly ever do.
In Illinois, which releases the most specific data about betting activity, parlays now account for more than 60% of the total number of online sports bets that people make each month and more than 27% of the money wagered, up from 20% two years ago.
That shift is no small matter to the two biggest sports gambling companies, DraftKings (ticker: DKNG) and Flutter Entertainment (PDYPY), the owner of FanDuel. Parlays have allowed them to make much more on each wager. The companies don’t regularly release details on just how profitable parlays can be, but a Barron’s analysis of data released by state gambling regulators shows that the companies’ average “win margin”—the amount they keep from bets—is about 20% on those bets, versus 5% for a standard bet on a single outcome in baseball or football.