I’ve believed for a long time and continue to that the math on these businesses just doesn’t work. Eventually they won’t exist because they aren’t profitable.
These companies and their apps feels like they're framing this as a social media app. Get together with your friends, play against each other. Its very, very much like fantasy football which generates billions in revenue every year. To me, those are the people and the money they're aiming for - not the casino betters.
I would assume this is the early stages of any market. You have a lot of companies jumping into the fray and trying to make it work. Then as time goes on, like you said, the money just won't work for them and at which point you'll see the standard consolidation where the companies who figure it out will still be there, possibly buy up some smaller companies and so on and so forth.
It will be interesting to see if companies like Draft Kings and Fan Duel can outlast some of the bigger players coming in like BetMGM and other casino backed companies. I don't think we'll be seeing "Bob's Bets" app anytime soon, which would support your idea that this is most likely a loss leader for these casino's, and what's the threshold where they will pull out?
>gamble on games like slots that have a huge house edge
This is what they're working on next: legalization of online casino-style games. They've already got seven states. Profit margins will only go up.
Particularly for Las Vegas, the business may not be what you think it is. Vegas is, amongst other things, a global money laundrette.
Your only way of dealing with a bad debt is banning the person and letting the other amateur bookies know about it.
No they can't. Large ones can, but the small ones sometimes cannot because they have to match the large ones but in a smaller pool. If everyone knows which team is going to win, diehard fans of the losing team will still bet on their team - large players capture that in their odds and break even. Small players don't have the same mix of customers and so will have to take that loss because they need to compete with the large ones.
Of course overall the small players balance enough the 10% rake from less sure games over the years to make a lot of money but they can still lose 6 figures on some individual games. Small players are less a target for the pros (if only because they know their customer better and so won't accept the pros in the first place).
Remember the small players are often running an illegal operation. They need their reputation of paying out so that customers don't go elsewhere to even turn them in.
Making betting lines is a crazy complex mix of the house essentially betting on an outcome themselves, tempered by a limit to exposure/liability as well as the need to keep lines in basic accordance with other linemakers.
It's unreal how good these guys are most times.
And in fact if these guys were good they wouldn't be banning people at all
… But I thought even a small sports book could balance things properly by setting an appropriate pointspread?
my parent has described a risk for the sports book that seems too assume the simple picking of winners and losers and not a pointspread?
There’s a reason MMOs let you put money in and make hoops to take it out. Otherwise I can overpay for garbage from my “associate” and he can cash out free money with very little paper trail.
Their net income is either positive or negative