Sportsbooks could use a win.
Citizens JMP estimates DraftKings and FanDuel lost a combined $185 million from a chalky March Madness that featured only the second-ever all-one-seed Final Four and, for the first time ever, zero underdog victories in the Sweet 16 or Elite Eight.
Books dodged a bullet with odds-on-favorite Duke’s final-minute collapse in the Final Four. The Blue Devils accounted for more than 40% of handle in the national title market at most major sportsbooks. But those results fell outside the first-quarter reporting period, which ended March 31.
Another unlucky quarter?
Instead, early-round March results have Q1 shaping up to be an uphill climb — following what DraftKings described as its worst stretch of game outcomes ever in Q4. That quarter saw betting favorites win at unprecedented rates and impacted FanDuel parent Flutter by $360 million.
“A bad stretch of game outcomes throughout 2024 allowed us, as well as investors, to understand the day-to-day volatility in the online gaming business model,” Citizens JMP senior equity analyst Jordan Bender wrote in a financial note. “Unlucky outcomes are part of the business model, evident across any subsector or geography within gaming, including Las Vegas, Macau, and regional gaming.”
“Entering 2025 with a clean slate, we felt sentiment had reset,” Bender continued. “But March Madness in the final two weeks of the quarter surprised to the downside, again. Investor sentiment has since turned materially more negative around the sports betting business model on the back of another quarter of cuts to estimates.”
A “great” Super Bowl helped offset some early Q1 struggles, with same-game parlays and player props powering strong performance, both Flutter CEO Peter Jackson and DraftKings CEO Jason Robins have said, referring to the largest single-day betting event of the year. But the next few months could be critical for maintaining their structural hold targets — 16% for FanDuel and 11% for DraftKings — to offset lingering damage from March and reassure investors ahead of a slower summer stretch.
More games, less risk
Unlike the single-elimination chaos of March Madness, the second quarter brings a steadier cadence of events. NBA and NHL playoffs play out over best-of-seven series, while the return of MLB adds daily volume — not volatility — to the calendar.
That shift offers a potential reprieve. Citizens JMP notes that the second quarter historically represents just 21% of annual handle but delivers the highest average parlay margins and the lowest volatility of any quarter. The sheer volume of games across sports helps smooth out risk and protect against major downside.
“Stability and volume help smooth margins and reduce downside risk,” Bender wrote. “Even if upside is capped, a ‘clean beat’ in Q2 could help reset sentiment after a rough start to the year.”
Professional leagues also support deeper, higher-margin betting options, as many states restrict or prohibit markets on college players, limiting parlay and prop betting during March Madness.
Rooting against the favorites
Still, the quarter isn’t without risk. NBA title and conference futures are already drawing heavy interest on popular teams. As of April 17, the Los Angeles Lakers, Boston Celtics, Oklahoma City Thunder, and Cleveland Cavaliers were among the most bet championship picks at both ESPN Bet and BetMGM. The Lakers led BetMGM’s Western Conference handle, while the Cavs dominated ticket share in the East — both liabilities if those teams go deep.
In the NHL, BetMGM data shows public money concentrated on teams like the Winnipeg Jets, Colorado Avalanche and Vegas Golden Knights, their biggest exposures on the ice.
The NFL Draft later this month also presents liability. BetMGM lists Travis Hunter and Shedeur Sanders as the biggest liabilities across multiple top pick markets. Boise State’s Ashton Jeanty is also drawing significant handle across first-round props at ESPN Bet.
While no quarter is ever risk-free, Q2 offers sportsbooks a chance to rebound — just in time, before the industry’s seasonal summer lull sets in and attention turns to online casinos and the fall football ramp-up.
