Q&A of the Day – What Percentage of Sports Bets Lose Money & How Much?
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
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Today’s entry: Love the show! Here’s one for the Q&A. Something I find annoying is that I see and hear many people who complain about the cost of living but bet on sports and play the lottery. We know they’re losing money on the lottery and they probably are on sports betting too. My questions are these... How many people actually win and how much money are people losing playing these things?
Bottom Line: Great questions. I immediately thought of my friend the Greek – who makes a living talking about this stuff and making sports betting picks. He’ll be the first to tell you that just about everyone who plays loses. And he’s right. With the proliferation of sports betting, we have a record amount of people gambling and losing record amounts of money. So, about that in addressing your questions...
According to the National Council on Problem Gambling, a record of nearly 70% of adults are gambling (lottery, sports betting, casino, online gambling, fantasy sports) annually. Potentially fun fact. Did you know that the U.S. is not the top country for gambling? It’s Australia, where about 78% of adults gamble. Anyway, back to the United States and the question at hand.
The percentage of Americans gambling is about 10% higher than a decade ago and is mostly driven through the proliferation of sports betting. Here are the most recent estimates of the percentage of adults that are gambling:
- Lottery: 55%
- Casino: 27%
- Sports Betting: 25%
- Online Gambling: 18%
- Fantasy Sports: 13%
The first thing that jumps out in this analysis is that the average person who regularly gambles on something, gambles in multiple ways. For example, my initial analysis shows that approximately 97% of people who bet on sports within the past year also bet on other things too. To the point of today’s question, that potentially magnifies the losses people incur during the course of a year. To break that down into dollars and cents, here’s what that looks like by type...
The average gambling loss by type per year:
- Fantasy Sports: $75
- Lottery: $250
- Casino: $400
- Sports Betting: $800
- Online Gambling: $1,000
What this shows is that the fastest growing forms of gambling, sports and online betting, which not coincidentally are also the easiest and most convenient to do, are also linked to the highest losses as well. This underpins your point about people betting on sports and then complaining about the cost of living. So, about that...
Most recently, the average American who’s gambled on something over the past year has lost an average of $750 doing so. That’s a number that factors in the few who come out on top. And so how few is it? What percentage of people who gambled over the past year came out on top in the end? The answer is...4%. Yes, the old saying about the “house always wins”, most certainly still applies.
What’s unclear in the data at this stage is how many people are “playing for fun” vs. How many are actually gambling thinking that it’s going to pay the bills. Just as there are people struggling financially who play the lottery thinking that’s their ticket out of their struggles, there are likely some who are betting on sports and other things trying to do the same thing. For that reason, even though it’s almost always the case that the bets they’re placing will lead to more financial challenges in the end, it may seem logical to them.
Most recently 8% of all adults in the United States have engaged in betting behavior that’s endemic of having a gambling problem. In other words, greater than 11% of Americans who bet on anything likely have a gambling problem and that’s also a number that’s growing as gambling grows across the country. While all gambling has the potential to be addictive to those who’re susceptible to it, the early returns for sports betting suggest the overall percentage of those who get hooked might be higher. And that’s due to the nature of that type of gambling.
Most people who play the lottery know they’re not going to win. Most people who go to a casino are only hoping to win. But most people who bet on sports are expecting to win. By definition, on average, if you’re not playing parlays (which increasingly people are doing) you will win half of the time. That creates the positive feedback loop that keeps people coming back for more. However, the problem is that about 10% of the winnings, known as a hold percentage, go to the house. This means that in order to just breakeven one must be winning over 55% of the time. That’s why almost no one ever wins in the end.
So yeah, your best bet isn't to make one, especially if the cost of living is already proving to be challenging.