Sports betting revenue doubles year-over-year as March Madness upsets drive trends

Yahoo Finance sports reporter Josh Schafer joins the Live show to break down the early gaming numbers from March Madness.

Video Transcript

ADAM GREENBLATT: Over the course of the tournament, we see more action than the Super Bowl collectively. So this year will be leaps and bounds ahead of any prior and even ahead of this year's Super Bowl, so really looking forward to it.

SEANA SMITH: That was BetMGM CEO Adam Greenblatt just a few weeks ago, telling us that March Madness was likely to be the biggest yet for sportsbook operators. Now at the Final Four set and no top three seeds remaining for the first time since 1979, the betting numbers appear to be playing out just as Greenblatt had predicted. Right here on Yahoo Finance, well, Josh Schafer is here with more on that story. Josh, I know you've been looking into the numbers. How big of a home run has this tournament been?

JOSH SCHAFER: Yeah, Seana, so I took a look today at New York because that's the best weekly numbers that we get. And you can see the numbers from the first weekend. And when you take a look at New York, we'll start with BetMGM specifically in their hold percentage. So the hold would be what the gambling operator holds after paying out losses and promotions. You can see it over doubled this year from about 3%, a little over 3% last year, to 8%. Similar story at DraftKings. DraftKings was around 3% and now up above 8% this year as well.

Now there can be a couple of reasons for this. One of them is we've seen the sportsbooks be successful at getting same game parlays and live betting more active. Gamblers are worse at those bets, so the house wins more. Also it's been a weird year for upsets. Last year, we had St Peter's, which a lot of bettors were actually on St. Peter's and won a lot of money from that. This year, gamblers never really moved over to a lot of these underdogs. And so people kind of stayed at the top teams, and it didn't really pan out for them.

I thought it was interesting. Research from Macquarie showed that the only day that gamblers actually had a negative hold in week one was the Purdue Fairleigh Dickinson day. So that was Friday. So Fairleigh Dickinson, a 16 seed, became the second 16th seed ever to upset a 1 seed. And for some reason, the public liked that one. But then when you fast forward to Saturday, Sunday, when some of the less popular upsets happened, like Princeton moving on or even FAU moving on, bettors just haven't been attracted to those upsets. So it's really working out well for the books right now.

DAVE BRIGGS: Yeah, all the futures bets are on the likes of Texas or Alabama or UCLA or even Duke.

JOSH SCHAFER: The top 10, Dave.

DAVE BRIGGS: Nobody.

JOSH SCHAFER: The top 10 bets at Caesars Sportsbooks were all number three seeds or higher or Duke. That was all it was. So the futures bets are all out of the market now. Essentially, people that bet before the tournament for a team to win, a lot of those bets are just gone now.

DAVE BRIGGS: Including mine on Texas. So who's left? Who's the betting favorite, and who's the underdog?

JOSH SCHAFER: Yeah, so we've got UConn, San Diego State, Miami, and FAU. And UConn is the favorite coming in at minus 135 to win two games, which I should point out for those that don't gamble, that is a pretty crazy price for UConn-- heavy, heavy favorite there. But you can see how those numbers have sort of come down. FAU was a plus 40,000 to win the national championship this year. That's your talking you bet $10, and you could win $4,000 if you had bet on them at the beginning of the year. So no one's expecting these teams to be here. And so that's why the books are doing so well because pretty much not a lot of people bet on them before the year. Sometimes we talk about crazy upsets, and you're wondering if the sportsbook is going to lose a lot of money, right, because a lot of people bet on them. There wasn't heavy volume on these teams. I don't know who you got, Dave. I'm going to go UConn. I know that's boring.

SEANA SMITH: Well, that's a safety pick.

JOSH SCHAFER: It's a boring pick, but--

SEANA SMITH: There we go.

DAVE BRIGGS: They played bet. There's no money on there.

JOSH SCHAFER: No, I wouldn't bet on it. I might take them spread, though. In a couple of these games, they'll probably be favored pretty heavily. But that's-- I think they've played the best. They've played great. I was in the garden on Saturday. The FAU crowd was strong. I will say they were fun. It'd be fun to see a nine seed win.

SEANA SMITH: It was very fun. What do you think?

DAVE BRIGGS: Look, I would certainly bet on UConn. I just wouldn't sleep on Miami. They've got three dudes, and Jordan Miller will play in the NBA, probably the most underrated player left in the tournament. It's just been wild. I think it's been fun having the upsets. We've had too many.

JOSH SCHAFER: Well, now you wonder if you're going to get--

SEANA SMITH: Too many? There are never too many.

DAVE BRIGGS: Are the tickets going to be awful?

SEANA SMITH: Well, yeah. I think the ratings come out.

DAVE BRIGGS: I think the ratings would struggle.

JOSH SCHAFER: Is it going to be a bad game? Because you might get a blowout now when these--

DAVE BRIGGS: The finals will be a blowout. That I know. Miami or UConn.

SEANA SMITH: You heard it here first. We'll see in a couple of days whether or not you are right. All right, Josh, thanks so much. Great stuff.