Sports Gambling Business: How a Sportsbook Makes Money in 2026
How Did Legal Sports Betting Become a Business?
Before 2018, you had to go to Nevada to take a bet. One state, that’s it. Then on May 14, 2018, the Supreme Court sided with New Jersey in Murphy v. NCAA and struck down PASPA, the 1992 federal ban. Each state could now decide for itself, and New Jersey was taking bets about a month later. The map has filled in fast since. Trackers count 39 states plus D.C. today, and around 30 of them let you bet from a phone.
How the Sports Betting Industry Earns Its Revenue
A sportsbook doesn’t have to guess who wins. It pays winners a bit less than the bet is really worth, and the difference is its margin. Small on one bet, huge in bulk. Americans wagered $166.94 billion on sports in 2025, as per the American Gaming Association, with the books keeping $16.96 billion. That’s 10 cents for every dollar and 22.8 percent more than the year before. Early on, books held closer to 7 or 8 cents.
Parlays are where the money is. One straight bet leaves the book with about 5 to 7 cents on the dollar. Tie three or four legs together, and the book keeps a lot more, because the player has to win every leg. Analysts put parlays at roughly two-thirds of revenue at DraftKings and FanDuel. Neither company publishes the exact split.
The same math cuts the other way. FanDuel kept 19.2 percent of NFL money wagered during the 2025/26 season, and Flutter CEO Peter Jackson admitted that the result had a “real impact on customer sentiment,” as reported by Gambling Harm. Winning too much too fast costs you bettors.
Who Holds the Betting Market
Two brands dominate. FanDuel and DraftKings control three-quarters of online revenue, with Bet MGM holding a distant third at 8 to 10 percent. Betting companies with deep pockets tried to break in. ESPN Bet left the market after capturing only about 3 percent of it, well short of what PENN Entertainment had hoped for.
States set the cost of entry through taxes. New York takes 51 percent of gross gaming revenue, Pennsylvania 36 percent, and Michigan 8.4 percent online. A sportsbook that looks healthy on revenue can look thin once tax is out.
The numbers from New York’s May 2025 offer a perfect illustration of how skewed things become. FanDuel captured 36.3% of the handle, followed by DraftKings with 35.5%. Bet MGM and Caesars took almost all of the remaining action. At the same time, 13.6% was taken by FanDuel’s parlay-heavy offering compared to 10.7% by DraftKings.
Prediction markets add a new threat. The AGA says event-contract platforms have diverted more than $500 million in potential sports betting tax revenue from states. Whether those platforms count as gambling is still being fought over.
Types of Sports Bets and Where the Margin Hides
Straight bets on the moneyline or total are the base of the book. Props and parlays hold most of the margin. Live betting adds speed, because prices change with every play. American sports leagues and college sports both feed the same ticket, and a football Sunday can double a book’s handle in a day. Operators watch the NFL calendar the way retailers watch December.
Is a Sports Gambling Business Profitable?
It can be, though results swing by quarter. Flutter reported FanDuel sportsbook revenue of about $1.5 billion in the fourth quarter of 2025, up 35 percent, yet its stock fell when the NFL results soured customers. DraftKings reported $110 million in extra revenue from “sportsbook-friendly outcomes” across two months of 2025, and FanDuel posted a 16.3 percent hold in June of that year. Bad luck works the same way. A streak of favorites covering the spread can erase a month of earnings.
Small operators survive by controlling variance. Limits per bettor and careful trading, as well as a mix of markets, matter more than a clever promotion.
What It Takes to Start Your Own Project
Licenses come first, state by state in the US or country by country elsewhere, with odds feeds and payments following. A sportsbook can be built from scratch, but most newcomers buy a ready core. BSW offers sportsbook software bundled with its platform, and licensing stays with the operator.
FAQ
How can I start a sports gambling business?
Pick a market, secure a license from its regulator, choose a sportsbook platform and odds data provider, connect payments, and set up compliance. Many operators start with a white-label platform and launch in one market first.
What are the biggest sports gambling companies?
FanDuel, owned by Flutter, and DraftKings lead the US, followed by BetMGM, Fanatics Sportsbook and Caesars.
Is a sports gambling business profitable?
Yes, at scale. US sportsbooks kept $16.96 billion in 2025. Smaller operators face taxes, data costs and heavy bonus spending, so margins vary.
What is the most profitable sport to gamble on?
No sport is reliably profitable for bettors, since the margin favors the book. For operators, football and basketball bring the highest handle, and parlays bring the best margin.
What are the legal requirements for starting a sports gambling business?
A license in each state or country, identity and age checks, anti-money-laundering controls, responsible gambling tools and tax registration. Rules differ by jurisdiction, so confirm them with a gaming lawyer.
How much does it cost to start a sports gambling business?
License fees alone range from about €15,000 to €50,000 a year in popular offshore jurisdictions, with the UK costing more. Data feeds, software, payments and marketing come on top, and quotes depend on scope.
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