Regression Means Business: Sportsbooks’ November Hold Is Bigger Outlier Than October

The sports betting gods, they giveth and taketh away. More accurately, the house will taketh its vig, some months more than others, variance does its thing, and over the course of a year the figures will normalize. 

But no, sportsbook risk-management is not for the faint of heart. Maybe fewer antacids are required at the heavily recreational, single game parlay-driven sportsbooks, but even that class is subject to the bounces of oblong-shaped balls, coverage breakdowns, and a streak of favorites covering the spread. 

That was the lesson of October 2024 when DraftKings Inc. reported its third-quarter results and comically characterized the impact as “customer-friendly sport outcomes” while revising its fiscal year guidance in response:

DraftKings is revising its fiscal year 2024 revenue guidance due to the impact of customer-friendly sport outcomes early in the fourth quarter of 2024 to a range of $4.85 billion to $4.95 billion from the range of $5.05 billion to $5.25 billion, which the Company previously announced on August 1, 2024. The Company’s updated 2024 revenue guidance range equates to year-over-year growth of 32% to 35%.

Enter the November 2024 results (see below), a month in which more NFL underdogs had their way and the moons moved back into the house of DraftKings. 

According to state filing-driven estimates of Casino Reports collaborator Alfonso Straffon, an industry veteran and former equities analyst at Deutsche Bank, the 11% hold percentage reported by sportsbooks nationwide is the highest November on record in the post-PASPA era in the U.S.

“Just last night, if the Bengals made that two-point conversion or if they didn’t score that last touchdown, there would have been very different [betting] outcomes,” DraftKings CEO and co-founder Jason Robins said in a conference call with analysts in early November. “So, things can swing either way. Over a longer period of time, it normalizes.”

Regression didn’t take long. In fact, the 11% hold for November is even more of an outlier than the 7% in October. 

So we’ll be curious to see if DraftKings revises its guidance back upward. And back and forth we go.