MW Why DraftKings is betting on a subscription service that gives members improved odds
By Weston Blasi
DraftKings Sportsbook+ will offer improved odds on some parlay bets - for a price
A sports-betting company has joined the subscription frenzy.
DraftKings Inc. (DKNG) has launched a new subscription service that will charge members a monthly $20 fee in exchange for improved odds on some sports parlay bets. The service is called DraftKings Sportsbook+.
Members would have access to "stepped up" boosts for all parlays where the individual legs are -500 or shorter. Two-leg parlays will see profits increase by 10% as part of the membership, and the boost will grow as the parlays get bigger. A parlay with more than 10 legs will have the profits for the bettor doubled.
A parlay is when multiple bets are combined into a single wager; the bettor has to win them all to win, and usually earns a higher payout for the increased difficulty.
"The subscription service was designed to offer our customers an enhanced fan experience, creating more excitement and value to our extensive parlay offering," a DraftKings spokesperson told MarketWatch.
DraftKings called the offering a "premium subscription" and stated that for the start of its rollout earlier this week it will be available to some bettors in New York.
DraftKings reported 3.6 million monthly paying players who used its service in the third quarter of 2024, an increase of 55% compared to the same quarter last year.
DraftKings is the first betting platform to offer a subscription option. DraftKings sportsbooks and DraftKings's online casinos are still free to use otherwise.
Why would DraftKings want to give improved odds to bettors? Because sportsbooks see parlays as a way to improve profit margins.
Parlays give bettors the opportunity to turn sometimes small bets into huge payouts, but they have a very low probability of cashing in. These low odds give the sportsbook big advantages over bettors.
"Structural sportsbook hold percentages increased year over year as customers continue to enjoy our parlay offerings," DraftKings CFO Alan Ellingson said on the company's Q3 earnings call.
The "hold percentage" refers to the portion of money gambled that the sportsbook or casino retains.
DraftKings CEO Jason Robins said on the same earnings call that he wants the sportsbook to "continue to push hard" on offering a variety of parlays to customers. Company executives also outlined plans to beef up its parlay offerings in NBA, MLB and player prop-bet parlays across all sports.
See: Here's how much money sports gamblers are betting every month - and their favorite sports to wager on
The introduction of DraftKings Sportsbook+ is another example of betting brands looking to promote parlay bets to the public. Oftentimes similar types of odds boosts on parlays are offered as a marketing tool to help keep customers betting and loyal to the betting platform instead of jumping to another site.
In addition, betting companies will frequently post pictures of winning bet tickets to social media after a bettor's parlay wins, likely in hopes of promoting its offerings. One bettor had an opportunity to turn $26 into $557,770 during the 2022 FIFA World Cup via a parlay bet, and sports-betting brands were quick to promote his story to give hope to people who envision themselves capable of turning $26 into a half-million dollars with some sporting savvy.
"Parlay [bets] are popular because everyone dreams of turning a little bit of cash into a big payday," said Steven Petrella, deputy editor for the Action Network. "Sportsbooks love to promote big parlay winners on Twitter and Instagram, but they're not posting the thousands of losing parlay tickets."
Since the U.S. ban on sports betting was lifted by the Supreme Court in 2018, it's been up to individual states to legislate sports betting. Thirty-eight U.S. states now offer some form of legalized sports betting.
Shares of DraftKings were up 3.2% during Friday trading, and are up 12.8% over the last 12 months.
Read on: How does a gambling site lose money? DraftKings just lost $250 million in revenue - mostly on NFL games.
-Weston Blasi
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January 03, 2025 17:28 ET (22:28 GMT)
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