Why DraftKings made $8M and BetMGM lost nearly $5M on Super Bowl bets in N.Y.

The biggest sportsbooks had the San Francisco 49ers winning the game against the Kansas City Chiefs; the 49ers lost the game in overtime.

Despite having superstar quarterback Patrick Mahomes, the reigning Super Bowl-champion Chiefs were underdogs at nearly all sportsbooks, albeit only slightly, giving casual bettors the allure of getting favorable odds and also the best player in the game on their side.

“It was a bad Super Bowl for the sportsbook. Many bettors had the Chiefs winning and overs on popular player props,” Tristan Davis, senior trader at BetMGM, told MarketWatch. An individual player prop is, for example, betting that Mahomes will throw for over or under 250 yards in the game. Typically, bettors disproportionately bet on the “over” rather than the “under” player props, because they are more exciting to root for.

The game going to overtime hurt especially because it extended the Super Bowl, allowing several popular prop bets, like a player’s receiving yards, to get even higher.

In addition to BetMGM, Caesars also lost money on the game. According to Caesars, it lost out on a lot of money when the game went to overtime – a popular prop bet that paid about 9-1 odds. Entering this year’s big game, only one of the 56 previous Super Bowls had gone into overtime.

“The game was good for the customers,” Caesars Sportsbook vice president of trading Craig Mucklow told MarketWatch. “The sharps were on the 49ers, and the public was on the Chiefs. It was a great comeback by the public on the game.” Sharps is a term used to describe professional or experienced bettors.

So why did DraftKings say it made so much money on the game?

“I think this speaks to the power of our work that we’ve done over the last few years to build out the Same Game Parlay product and improve player props and really diversify the bets, that despite the fact that the game outcome did not go our way at all, with the Chiefs winning, we ended up actually holding right in line with what we thought we would from a hold-rate perspective,” DraftKings CEO Jason Robins said during the company’s earnings call last week.

Of the nine sportsbooks operating in New York, including Bally Bet, DraftKings, FanDuel
FLUT,
-3.23%,
PointsBet, RWB, RSI and WynnBET
WYNN,
-1.81%,
BetMGM and Caesars
CZR,
-2.02%
were the only two that lost money on the game. New York’s Caesars sportsbook lost $970,404 off $12.5 million wagered, according to new data from the New York Gaming Commission.

In New York during the 2023 Super Bowl, BetMGM took in $5.4 million in Super Bowl bets and made $157,872 in gross gaming revenue, while Caesars took in $19.7 million and made $334,638 in gross gaming revenue.

The $4.8 million loss for BetMGM this year is the biggest recorded Super Bowl loss for a New York sportsbook since betting was legalized in New York state in January 2022.

Over $162 million was wagered at the nine legal U.S. sportsbooks in New York on Super Bowl LVIII, including retail sportsbooks, leading to a total of $12.4 million in revenue. That’s an increase from $123.8 million in wagers and $6.9 million in revenue in 2023.

Several U.S. sportsbooks contacted by MarketWatch did not wish to disclose specifically how much money they won or lost on this year’s Super Bowl across their other operating states. At sportsbooks nationwide, 69% of bettors were backing the Chiefs to win the Super Bowl, according to Action Network’s public betting data, setting up a big liability for sportsbooks if the Chiefs won the game. Which they did, in a 25-22 thriller.

See also: A six pack of beer for $340? How much things would cost if they increased as much as the price of a Super Bowl commercial.

DraftKings swung to a surprise quarterly loss when it reported earnings last week, but bulls still cheered. As MoffettNathanson’s Robert Fishman put it, “it is not really an exaggeration to say almost everything went right for DraftKings” in 2023, and the biggest stumbling block for the company was likely adverse outcomes for some sporting events.

A record 67.8 million Americans were estimated to wager on Super Bowl LVIII, a 35% increase from 2023, according to data from the American Gaming Association. And Americans were expected to wager an estimated record of $23.1 billion on this year’s Super Bowl, up from $16 billion on last year’s game.

Sports betting generated $10.92 billion in revenue in 2023, up 44.5% from 2022. Americans legally wagered $119.84 billion on sports, up 27.8% from the previous year, according to the AGA.

Thirty-eight states — plus Washington, D.C. — now offer some form of legal sports betting, representing 67% of the American adult population. The Roundhill Sports Betting & iGaming ETF,
BETZ
a tier-weighted index of global sports betting & iGaming companies, decreased 1.56% during Tuesday’s trading, but is up 6.33% over the past 12 months.

Read on: Will a Super Bowl only be available on a streaming service? ‘That’s where this is all headed.’