Dollars & Sense: Risky Side of Fixed-Odds Wagering

For as much as this column has called out horse racing's wagering providers for largely not embracing fixed-odds betting, some recent results for one of the major fixed-odds sports betting platforms serves as a reminder that there are risks to the approach. Of course, in pointing out those risks I'm also reminded of how unfair the current pari-mutuel environment is to new and everyday players. But first, the risk for fixed-odds bet takers: It is possible for the house to lose. While in pari-mutuel wagering bettors are wagering against other members of the public, fixed-odds wagering sees a bookmaker assign odds for potential bettors, who take or reject that price. Flutter, the parent company of FanDuel, recently offered a reminder that the house doesn't always win. The company issued a release Jan. 7 noting that player-friendly results in NFL games from Nov. 12-Dec. 31 forced it to reduce its third-quarter revenue estimate by $370 million. Not that this is the end of the world for FanDuel, which still projects revenue of $5.78 billion for the quarter, but that is down from the previous guidance of $6.06 billion to $6.25 billion. "Following our Q3 earnings report Nov. 12, continued strong U.S. player momentum has been offset by a period of very unfavorable U.S. sports results across the remainder of November and in December, primarily on NFL Parlay and Same Game Parlay outcomes," the company said in a Jan. 7 release. "The 2024/2025 NFL season to date has been the most customer friendly since the launch of online sports betting with the highest rate of favorites winning in nearly 20 years." While this is the risk of fixed-odds wagering for the bet taker, those are still some impressive revenue numbers for the quarter. It again serves as a reminder that horse racing is not side by side on the FanDuel app and other popular sports betting platforms generating billions in revenue. That would seem like a place horse racing would want its product as it tries to reach new players. As for FanDuel, the company said its fourth-quarter adjusted earnings are estimated to be $161 million. It basically said that sometimes the players win more than expected, sometimes the house wins more than expected. Onward. "The transitory nature of these results has no impact on the underlying assumptions and guidance expectations communicated at our investor day in September, and we remain confident in the growth drivers and long-term growth trajectory set out at the investor day," the company said in a release. One Final Thought I also couldn't help but think that this serves as a reminder that racing has been willing to give some players in its pari-mutuel pools, computer-robotic bettors using sophisticated algorithms, every advantage against the rest of the players in those pools. They get the best rebates, are always last into the pools, have information access that allows them to project true odds, and the ability to express their betting opinion in an instant. Just think if these players were going up against the house? Of course by definition some of their advantages would be eliminated in fixed-odds pools that likely would focus on win betting. Beyond that, the bet takers would keep a close watch on any bettors consistently winning against the house. Under this scenario, everyday players would be better protected. Granted, some version of the CRW players probably would be the ones setting the house's fixed odds. But at least everyday players would have transparency on the front end, locking into a price, and the house would be working to keep the playing field level for all.