Online Sportsbooks Run Into Recent Tough Sledding with NFL

The tougher times for online sportsbooks are unlikely to get them much sympathy from their clientele, the beneficiary of those losses.

Online sports betting sites are going through a bit of a rough patch recently when it comes to booking the National Football League. 

Investment banking and equity research firm JMP Securities said in a note to clients on Tuesday that the Week 13 results in the NFL were “another headwind” for the fourth quarter. 

“Results were largely unfavorable across the NFL for the second consecutive week,” analyst Jordan Bender wrote. “Last week hold rate was 4% (NY results) and we see continued pressure to start December.”

Week 12 saw almost every NFL favorite cover, which is typically good for the betting public, as recreational players historically like to side with the better team on paper. If the public is winning, though, the books are losing, which is what happened at a greater clip than usual during the NFL’s Thanksgiving week slate of games.

“However, despite the notable Thanksgiving upset of 8.5-point underdogs Green Bay beating Detroit, a low underdog victory rate across the wider gameweek (25% vs 34% season to date) would have been unhelpful for margins,” analysts at investment bank Jefferies wrote in a note to clients on Sunday. “Indeed, [New York] margins were just 4.2% vs an 8.6% long-term average for the state.”

Hold this L

Week 13 was trending in a similar direction until the underdog Green Bay Packers and Cincinnati Bengals pulled off upsets in their island games on Sunday and Monday night.

Still, according to Covers' trends, NFL favorites are 36-24-2 against the spread in the last 30 days, or a 58.1% win rate for chalk-eaters, not including pushes. That highlights the recent hard times for bookmakers, as favorites are 98-85-10 against the spread for the season, or a 50.8% win rate.

JMP’s Bender said they estimate sportsbook hold thus far for the quarter is around 7.5%, compared to 8.9% in 2022. The average win rate for operators for the NFL season to date is 8.3%, according to JMP's projections, whereas it was 9.1% for the 2022 NFL season as a whole. 

“Handle has been consistently strong and carried over into December, but the tough hold comps are putting pressure on [fourth quarter] estimates whereby we see downside risk to current expectations,” the analyst wrote.

The tougher times for online sportsbooks are unlikely to get them much sympathy from their clientele, the beneficiary of those losses. They could, however, cause concern for shareholders of publicly traded online sports betting companies, such as DraftKings Inc. 

DraftKings CEO Jason Robins noted on Monday that the Boston-based online bookmaker hiked its revenue guidance at the start of November and then “literally had the worst stretch of the year” for the NFL. 

But Robins wasn’t hitting the panic button, telling an online gambling conference that a winning run for customers isn't necessarily a bad thing. Users do enjoy a victory, and they will likely recycle winnings into other wagers with DraftKings. 

And then, of course, runs do eventually come to an end.

“It's just a matter more of whether it comes in the next four weeks or in [January or February],” Robins said. “It always kind of evens out.”