That’s where the juice comes from

Traditional sportsbooks are market makers. They set a betting line—the Cubs will win by two runs or more, for example—to attract a roughly equal number of wagers on each side while keeping a small amount for themselves. DraftKings and competitors start with the same approach, but other techniques they use are controversial and likely to attract regulatory scrutiny if the apps draw tens of millions of new customers, as many analysts expect.

The companies harvest user data to ensure that losing bets outnumber winning ones. This process starts with the companies’ ability, so far permitted by state regulators, to profile customers based on betting histories and limit the size of wagers from those expected to win, much like traditional casinos kicking out sharps from the blackjack table. The apps use internal ratings to target the biggest losers, marshaling online tracking technology in a way that casinos—which once handed out rolls of quarters to entice repeat business—could only have dreamed of. DraftKings and FanDuel hire spokespeople, often retired athletes, to pitch risky multi-leg bets that aren’t likely to pay out. In states where it’s allowed, the ultimate prize is cross-selling sportsbook customers into online casino games. “That’s where the juice comes from,” Adam Kaplan, FanDuel’s general manager and vice president for content until last year, said at an industry conference in New York in April.

from this Bloomberg piece about the DraftKings bar coming to Wrigley Field.



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