Analysis: Why The Parlay Is Sports Betting’s Top Business Trend Of 2023

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It is hard to think of a trend that had a bigger impact on sports betting in 2023 than improving the parlay.

Parlays have long been the highest-margin product for a sportsbook. As the transition has gone from customer acquisition to customer retention and profitability, parlays have been a key way for sports betting companies to improve their structural hold.

From standard parlays to same-game parlays, ill-thought remembrance parlays and progressive parlays, 2023 was certainly the year that operators focused on parlays.

Sports betting hold growth as parlay play boomed

It is easy to see through the numbers how operators have made permanent changes to hold through these national numbers for the past three years:

2021$57.8 billion$4.35 billion7.5%
2022$93.7 billion$7.59 billion8.1%
2023 (through Oct.)*$89.9 billion$8.50 billion9.4%

*Does not include Arizona, Colorado or Illinois for October or any of Kentucky

That 9.4% hold for 2023 is 1.9 percentage points higher than 2021, which was a year of reactivating customers for sportsbooks following the 2020 sports shutdown from Covid.

FanDuel first to hit profitability

Flutter CEO Peter Jackson never missed an opportunity to talk about FanDuel‘s US profitability this year.

Much of that FanDuel profit had to do with its parlay products and improved pricing. Flutter reported its gross margins were up 1.7 percentage points to 11.3% in the first half of 2023.

Flutter said in that first-half report that higher adoption of same-game parlays and tighter lines helped “extend our pricing advantage over the rest of the industry to 410 basis points.” The SGP boom in the United States started with FanDuel, of course, and others followed suit.

DraftKings: parlays are ‘win-win’

DraftKings CEO Jason Robins may have had the quote of the year when he spoke at a technology conference about the work the company was putting into parlays.

“It’s a great example of a win-win for the customer and the business.” Robins said of parlays.

Robins was not all wrong, of course. Customers want opportunities to bet that will make games exciting, and parlays are certainly one popular way of doing that.

House always wins, though

But parlays, of course, are much more lucrative for the house than bettors.

Robins noted in May that getting the most out of customers does not mean tightening odds, but simply by pushing parlay products more.

“We’ve seen no decline in demand as we’ve increased hold rate,” Robins said. “The important thing is we’re not increasing it by making the odds any worse for customers. It’s just by pushing more parlay mix and things like that.”

DraftKings turns to Progressive Parlay

DraftKings took a page out of the competition’s book and announced Progressive Parlay would be its next big product at its Investor Day.

Those competitors are not sportsbooks, though. They are daily fantasy operators like PrizePicks and Underdog who offer controversial pick’em games in many states, including states both with and without legal sports betting.

Some states already acted on the DFS operators by banning pick’em style contests. How others deal with the issue will be a top story to watch in 2024.

Entain buys Angstrom

The purchase of data analytics company Angstrom by Entain for up to $265.4 million checks two big boxes for BetMGM: AI pricing and parlays.

Angstrom not only improves BetMGM’s machine pricing, which creates more markets for bettors. It also means more products with better margins, like house-priced same-game parlays.

“Their next generation forecasting, pricing and risk management capabilities will unlock significant opportunities across BetMGM’s U.S. sports betting offering, particularly in the fast-growing markets of parlay and in-play wagering,” said Jette Nygaard-Andersen, chief executive officer at Entain, said at the time the acquisition was announced.

Caesars likes product, aside from parlay

Caesars, meanwhile, said it finally felt like it had a product that is comparable to DraftKings and FanDuel at the top.

Except for, of course, “some pieces of functionality that we just haven’t developed yet or focused on,” CFO Eric Hession said on the company’s third quarter call.

The company added same-game parlays for college football, live same-game parlays and alt-line same-game parlays this year. Those additional parlays will be available for the NBA and the NHL “soon,” Hession mentioned on the October call, which should help bridge that gap.