The great Ernest Hemingway once noted that writers should have ‘a built in BS detector’. It’s not a bad thing to have if you’re involved with sports betting in any capacity either. My personal ‘built in BS detector’ has been working overtime lately trying to figure out how every state except Nevada managed to lose money on Super Bowl LIV between the Kansas City Chiefs and San Francisco 49ers.
Just to refresh your memory, Nevada sportbooks made an absolute killing on Super Bowl LIV. It brought the second largest handle in the 29 years that the Silver State has been releasing data on the Super Bowl ($154.68 million in bets taken). It also brought bookmakers the second largest hold–that’s what gaming industry types call profit–of $18.77 million for a hold percentage of 12.1%.
BOOKMAKING ISN’T EASY
The other states in the US with regulated sports betting didn’t fare as well. We keep reading all of these breathless reports that New Jersey is going to overtake Nevada as the epicenter of sports betting in the United States. I’m not holding my breath. New Jersey lost $4.28 million on Super Bowl LIV on an overall handle of $54.3 million. That makes their second straight losing Super Bowl following 2019’s $4.57 million loss on a handle of $34.89 million. New Jersey is now 0 for 2 on Super Bowl profits. Nevada has lost money on the Super Bowl only twice since 1991 when detailed Super Bowl revenue figures were made available for the first time. That’s 28 out of 30 years.
Pennsylvania also lost money on Super Bowl LIV ending up $3.3 million in the red on $30.7 million handle. Rhode Island–where sports betting is little more than a ‘gimmick game’ for the state’s lottery–managed to make a profit this year on a minuscule handle of $5.5 million, down from $6.5 million last year. Their hold of $805,000 might not sound like much but works out to 14.6 percent. The moral of the story is that lottery players aren’t particularly good sports bettors. That was also the case in Oregon which handled $2 million and won just $150,000. Beaver State sports betting is an even bigger ‘lottery gimmick game’ than Rhode Island.
Of course the money losing states had excuses–particularly New Jersey which threw out a litany of them. Last year, they were badly overweight on the Patriots and this year they were badly overweight on the Chiefs. Garden State bettors backed New England due to a supposed ‘regional bias’ while they backed Kansas City this year purportedly due to wistful sentimentality for Andy Reid who formerly coached the Philadelphia Eagles.
The other narrative out of New Jersey is that since sportsbooks are a fairly new thing there much of the loss was due to promotions, free bets, etc. designed to attract customers. At least they didn’t hide behind the ‘sports betting is a new thing in our state’ excuse which was heard in Pennsylvania and elsewhere.
THE ‘BS DETECTOR’ SOUNDS THE ALARM
For some reason, I kept thinking about the disconnect between the hugely profitable Super Bowl betting in Nevada and the money losing effort in New Jersey and Pennsylvania. The more I thought about it the less sense it made. Everyone was booking the same game and using pretty much the same prices. Were betting patterns *that* much different in Nevada? And what about the total–the game went ‘Under’ in New Jersey the same way it did in The Silver State. 70% to 80% of the betting action was on the ‘Over’. Nevada won huge on the total but why didn’t other states? The total staying ‘Under’ was also important because it torpedoed the most common parlays which were built around Kansas City/Over.
I’ll preface this analysis by stating the obvious–the only way to *really* determine what sportsbooks did on Super Bowl Sunday is to look at their books and that’s not going to happen. In some cases, state gaming regulators don’t want the numbers scrutinized–New York for example–and thus didn’t release Super Bowl specific figures. So we’re working with limited data and in some cases anecdotal information. Nevada’s bookmakers are generally pretty forthcoming with information about betting patterns on Super Bowl Sunday so that gives us at least some idea of what is going on behind the counter.
–BETTING PATTERNS: In the lead up to Super Bowl Sunday there sure wasn’t much to suggest that betting patterns were significantly different inside and out of Nevada. The line movement on the side and total was essentially identical at the overwhelming majority of US based sportsbooks. The market was so tightly in lockstep that when I did an article on ‘Outlier Super Bowl lines’ there really wasn’t much to report. In our final Super Bowl market analysis the story was the same–the line was Kansas City -1 or -1.5 everywhere.
The raises a very salient question: if books in New Jersey and Pennsylvania were as heavy on the favorite as they’re claiming why were they dealing the same prices as Nevada? The ‘word on the street’ in Nevada was that they were getting good two way action on the side. There’s plenty of bookmakers that will move a line ‘on air’ but you’d think that if any sportsbook was severely out of balance on the side they’d at least go to KC -2 or -2.5. to try to get some action the other way. The South Point in Las Vegas briefly went to KC -2 on Sunday afternoon and within minutes San Francisco money bought it back to -1.5.
Spoiler alert–although state regulated sportsbooks are a new thing in states like New Jersey and Pennsylvania the reality is that there has been thriving sports betting markets for decades. Not everyone in these ‘new markets’ is going to blindly back one team based on an arbitrary factor like geography or a coach’s resume. If a sportsbook needed to get some underdog money all they needed to do is ‘advertise’ that fact my moving the line. Based on my close observation and analysis of the odds screen before the Super Bowl and digging through the archives after the Super Bowl that didn’t happen.
Finally, to return to a point I made earlier–what about the total? It just doesn’t make sense that Nevada would make a killing on the game going ‘Under’ but sportsbooks elsewhere wouldn’t realize a decent profit with the same basic betting patterns. Plus it would have substantially reduced the liability from parlays which is often a bookmaker’s biggest concern. Every indication is that most props went the way of ‘the house’. Several Nevada bookmakers indicated that they realized a six figure profit from Patrick Mahomes winning the game MVP award. There just wasn’t enough variance in the prices to suggest that other states had a different financial position.
–PROMOTIONAL LOSSES: This is a tougher component to analyze for a variety of reasons. Certainly, some promotions would have an impact on the bottom line but most would not be reflected in the handle/hold figures for the game. You can be sure they’re somewhere on the balance sheet but the majority wouldn’t have a negative impact felt in the raw revenue numbers for the game.
On the other hand, some promotions would definitely appear in the handle/hold figure. Last year in New Jersey, for example FanDuel offered 53/1 odds on either side of the Super Bowl for promotional purposes. Not surprisingly, most bettors took the Patriots and FanDuel lost $5 million in the process. FanDuel clearly wanted to make a splash in their new market but on balance this promotion was insane. There’s certainly a dollar figure that can be attached to a new customer. I seriously doubt that it’s $5 million. Based on all of the information I have the promotions this year were more firmly within the realm of sanity.
SO WHAT DOES THIS ALL MEAN?
To be honest, I’m really not sure. Since I’m working with incomplete information all I can come up with are more questions. One thing I do know–if I’m a state gaming regulator, a gaming company stockholder or a top sportsbook executive I’m not going to be so quick to dismiss losing millions on the Super Bowl. It might not be a ‘red flag’ or anything like that but it’s sure not a good sign. There’s a reason that Nevada sportsbooks have turned a profit in 28 of the last 30 Super Bowls. It’s the biggest single day betting event in North America and it attracts legions of novice and recreational bettors. There are ways to book the side, total, moneyline and props to reflect the betting tendencies of the ‘public’. Like a veteran bookmaker once told me ’10 is always going to go into 11′ and that edge is present in every proposition a sportsbook puts on the board.
At the very least, I’m left wondering why so many sportsbooks are claiming that they were buried under Kansas City money and yet they made no effort to move the line to attract underdog action. I’m wondering how 80% of the total bets can be on the ‘Over’ and despite the game going ‘Under’ the only state that saw a windfall from that was Nevada. And I certainly can’t get past the similarities between money losing promotions today and offshore sportsbooks during the boom years that gave away so much in bonuses that they were on a one way ticket to insolvency. In theory, that’s something that state government regulation should guard against but there’s little to suggest that’s the case.
One obvious factor in Nevada’s success both on a micro and macro level: their gaming marketplace is significantly more competitive than anywhere else in the US. In many states, the regulatory body places arbitrary limits on the number of licenses that can be issued, the number of online ‘skins’ a licensee can have and countless other artificial barriers to a legitimately competitive marketplace. When you’ve got bureaucrats telling bookmakers what types of bets they can offer and what sports they can book there’s a problem. In some states, the lottery has a monopoly on sports betting and that virtually guarantees that it’ll lose money in the long run. There are a few states that ‘get it’. As I write this, I’m in Colorado and I’m extremely optimistic about their nascent sports betting industry. That notwithstanding, until governments realize that sports betting by it’s very nature works best in a competitive environment Nevada will remain the gold standard in US bookmaking.