Sports betting is experiencing explosive growth, especially since the Supreme Court of the United States struck down the Professional and Amateur Sports Protection Act (PASPA), a ruling that essentially legalized wagering on sports throughout the country. Even though information such as NFL odds have been available on websites for a couple of decades now, the sports betting business has experienced significant changes in the last few years.
What hasn’t changed in the gambling world is that the intent for sportsbooks is to balance the amount of wagering on both sides of a bet, not to get the line as accurate as possible or to identify the favorites as the team or individual that will actually come out victorious in a game, match or event. The goal is for the sportsbook to limit their risk of a particular outcome exposing it to a high payout on one side of a wager, thereby significantly decreasing their profits and jeopardizing their ability to continue to accept wagers.
Technology Pushing for New Boundaries
With the advent of more sophisticated computer algorithms and even though the revenue from wagering is on the rise, it has become quite expensive for sportsbooks to have their own odds making operations. The investment in computers and programmers necessary to remain competitive in the industry is high and in most cases is largely unnecessary given the fact that much of the odds making tasks can easily be outsourced with little impact on actual profitability.
One of the primary reasons is that as sports betting has grown in popularity and availability, the amount of data on actual wagering across all sports, and in particular NFL odds, has exploded and it takes a lot of technological resources to continually crunch those numbers on a daily basis. As competition has increased, sportsbooks have spent a lot more time and money on marketing while also making continual changes to their websites’ user interfaces.
For brick and mortar sportsbooks, many of which have also gravitated to providing online options, the trend toward consolidation and odds making outsourcing began quite a while ago. Mobile betting apps have also led to massive industry expansion and increased betting popularity.
Casinos and Sportsbooks Both Seeing Boosts
In addition, the casino industry itself has seen enormous consolidation, with almost all of the more than 70 gambling outlets in Las Vegas, for instance, owned by a handful of companies, including Caesars and MGM, which dominate the strip. The sportsbooks at those casinos now under the same management have also been placed under the same operators, giving them certain economies of scale that smaller sportsbooks don’t enjoy.
Therefore, instead of attempting to keep up with those large conglomerates, smaller sportsbooks use a couple of other strategies for setting and maintaining lines. One alternative is to utilize consultants to provide lines and work with the sportsbooks on making adjustments as wagers are made, with the primary goal to balance bets on both sides of the wager so that a consistent margin of 5-10% can be maintained.
While there is some expense associated with this tactic, it’s much less expensive than building a staff, investing in hardware and writing the complex algorithms necessary to churn through the extensive data necessary to set lines and odds. A small odds making team is still required, but it’s much easier to oversee tweaking and adjusting lines or odds than it is to set the opening numbers on hundreds of games and events every week, especially during the busiest times of the year.
Another avenue to utilize is simply to wait for the major operators to release their opening lines and use the same numbers for their own purposes. At its core, the sportsbook business is really about two major aspects: mitigating risk and generating a high volume of wagers.
Most sportsbooks have determined that they would rather outsource the risk mitigation, which is complex and increasingly more expensive, while using marketing and website features to differentiate themselves in the marketplace. Ease of wagering access, variety of funding mechanisms, quality customer service and reliability in paying out winning bets are all features on which sportsbooks are focusing as the popularity of sports betting increases around the world.