It occurred to me recently that state run sports books have to disclose their hold percentages and this could be an interesting thing to look at. So in this post I will take a look around at a few different markets and sports books and check out their hold percentages and what that might be able to tell us, if anything, about the different sports books, their clientele and the entire betting market as a whole.
First, some explanations and some simple math. What is 'hold percentage', exactly? A sports books hold percentage is exactly what it sounds like. It's the percentage of money wagered by bettors which the sports book keeps. So if a book takes in, say, 10k in bets and pays out 9k in winngs, their hold percentage would be 10% (they keep 1k of the 10k wagered). Pretty simple.
However, one thing to keep in mind here, and this is wildly misunderstood by just about everyone: a sports books hold percentage 'should' be 4.56%, NOT 10%. Everyone thinks that since they're betting at -110, the sports books edge is 10%. But that is incorrect. It's only 10% when you lose. And since you should win half your bets (betting straight markets at -110), the overall house edge on all bets should be 4.56%. In simple terms, if you bet straight bets at -110 in a perfectly efficient market close to game time, you will lose 4.6 dollars per every $100 you wager. (While we're at it, here's one more thing everyone gets wrong about sports betting lingo/math: a typical line with -110 both sides is a 20 cent market, NOT a 10 cent market. -110 both sides has 20 cents of juice in it because you have to go from -110 to 0, which is 10 cents, then 0 to the other -110. So 20 cents of juice total. A line of -120/even is the same amount of juice, 20 cents, just shifted 10 cents to one team. A true, balanced, 10 cent market would be -105 both sides).
Again, just to be perfectly clear; in the NFL regular season with both teams at -110 on the spread, if you threw 10 darts at a board every Sunday at 12:45 and picked teams that way, aka perfectly randomly, at the end of the year you should be down about 4.56% of the total amount you bet all year. That really should be, in theory, as BAD as you can do. With line shopping, bonuses and handicapping, you should be able to get that number down. Again, in theory.
Let's look at hold percentages in Las Vegas brick and mortar sports books first. Now, when looking for this data, I have learned that it's a little noisy. Each sports book/state does their accounting a little differently and we're relying on them to self-report. That said, I did find a couple good articles that show that the hold percentages for old school Nevada sports books has historically been about 5%. Here's a quote I found from William Hill in Kansas from 2018, for example:
"While sports betting will help generate revenue for the state of Kansas, the reality is that sports betting is a low margin business. In Nevada, the average hold – the amount retained by the operator after paying winning customers – in recent years has been around 5%. That margin has been trending downward due to the increase in mobile wagering and InPlay wagering, which is wagering on an event after the event begins. Both mobile and InPlay are lower margin products."
Since sports betting has become legal in most states, however, hold percentages have increased. Here is the national trend:
2019: 7.0%
2020: 7.2%
2021: 7.5%
2022: 8.1%
Using data from https://www.legalsportsreport.com/sports-betting/revenue/ we can look at each state for the past 6 years. You can check it out yourself, but the overall total is this:
Total money wagered: $352,392,456,869
Revenue (money the sports book kept): $29,478,521,378
Total handle: 8.4%
Using a different site, it breaks it down month by month, state by state and the overall handle is a bit higher, into the 9s. This is WITH bonuses factored in too, which were pretty substantial in the early days of Draftkings and Fanduel.
So what does this tell us? Well, nothing really earth shattering at first glance I suppose, except if you really think about it. The average sports bettor is losing about 100% more than he would if he just picked straight bets completely randomly. So your typical NFL sports bettor who watches all the games, watches pre and post game shows, follows the league closely, can name most of the rosters of each team, might even be paying someone for picks, is getting beaten by a random number generator. And not by a little bit either. By 100%! TWICE as bad. Guys! That's abysmal! And I know what you're thinking right now. "Well sure the average sports bettor loses like that, but I'm not the average sports bettor!" Well let me tell you, unless you keep accurate records of your bets, you ARE the average sports bettor. Someone reading this blog is probably a tiny bit more sharp than average, and I know I hammer this point all the time, but if you aren't keeping track you really have no idea what's going on.
If I have any goal with this blog, besides the enjoyment I get from writing it, it would be to help the average sports bettor lose a little bit less. You gotta know what you're up against and where you stand and if you aren't keeping track, it's like trying to be a race car driver and not timing your laps. You just have no idea. So start there. If keeping track of your bets seems like too much work or too daunting of a task, I would ask that you really consider what you're getting out of sports betting and if it's really worth it to you. Maybe it is. But I think you owe it to yourself to find out exactly how much you're paying for that little dopamine hit a few times a week when you win a bet. Winning money long term from betting on sports is a lot of work. Like, a shitload of work. I'm not going to lie to you and tell you it's easy, just follow my advice and give me money and I'll make you a winner, which is what a lot of people do. I'm just here to tell you that there is no free lunch and you're probably losing more money betting than you realize. I mean, that number up above from 6 years of betting just on legal books is 30 billion dollars in the sports books pockets. $30 billion!
Above is an overall trend line for the national average hold percentage. As you can clearly see, it's increasing, and not all that slowly either. Remember, a move from 4% to 8% is a 100% move, not a 4% move.
That's really it for today. Bit of a downer post, I know, but these numbers popped out to me. If there's anything actionable here, by the way, except for maybe taking a good hard look at your own betting habits, it would be to consider buying stock in the sports betting industry. I have stock in Draftkings at an average price of $18 per share which is pretty good with it being $45 per share currently. I can't say whether it's a good buy or not right now, but if brick and mortar sports books can operate profitably with 5% hold percentages, I would think an online sports book with hold percentages approaching double that figure (and rising) would be a good business to invest in. Of course, all this information is public and baked into the stock price, in theory anyway.
Lastly, a new little thing I'm going to do every post from now on is post the BTC price, market cap and market dominance. I think it'll be an interesting thing to look back on in the coming years. I plan on having this blog going basically forever so it'll be cool to look back at where we were at at various different times in the future.
BTC price: $65k
BTC market cap: $1.28 trillion
BTC dominance: 54.5%
Buy Bitcoin, store it yourself and have a good day! Bye for now!
