2021 has been a record-breaking year for the U.S. sports betting industry with over $53 billion in wagers. In addition, this is only from legal gambling operations and does not account for the $150 billion in offshore sportsbooks. Despite its success in the U.S. and abroad, Sports Betting is a Low-Margin Business Model with an 8% revenue margin.
According to sports betting software statistics, this is more than double the numbers from 2020. Last year, the U.S. sports gambling market saw a handle of $21 billion which was a record-breaking year as well. A big reason why is because the number of states with legal sports betting went from 20 to 33.
Despite such large numbers, the revenue margin is in the lower end of the profit-margin spectrum. As a rule of thumb, 5% is low, 10% is a healthy margin and 20% is a high margin. However, gambling is not your typical business which is why the number of bookie businesses increases every year. In fact, the sports wagering market does not look like it will plateau anytime soon and remains a great opportunity.
Sports Betting is a Low-Margin Business Model with High Potential
The average sports betting hold for a sportsbook will vary from %5 to 12% depending on their luck and management. For the actual profit from sports betting, this will depend on many factors that can make or break a sportsbook. Despite its low-margin of revenue, opening a sportsbook is still a gold mine for operators with high potential.
The first reason is probably because sportsbooks are providing a service and not a product. Therefore, the overhead cost is just the license, gambling software, location and staff. There is no need to worry about buying, storing, shipping and selling.
In addition, online sports wagering is steadily rising and, in several instances, has overtaken traditional sportsbooks. Since they do not need a physical location, the cost-of-operation is much lower leading to higher profits.
Needless to say, bookies make money from sports betting from quantity which can come from big bets or several customers. However, it is possible for bookies to make a decent living from just a few customers. As long as customers wager with them on a regular basis, a small bookie can easily earn $100,000 per year.
Another way bookies increase their revenue is by using a Sportsbook Pay Per Head service to cut down on cost. A Pay Per Head lowers the cost of operation because they provide the staff and the gambling software for bookies. Thus, they go from paying tens of thousands of dollars per month to $5 per player to operate their sportsbook.
The high revenue potential from sports betting will just depend on how manage your sportsbook. And according to gambling experts, a Bookie PPH is the best solution for higher revenues.