Will Online Casinos Eventually Outgrow Sports Betting in the U.S.?

This is an example of how the sportsbook will increase in compounded probability. Online casino games (such as slots, blackjack, and roulette), on the other hand, have set house edges. A blackjack bet with a house edge of 0.5% may not seem as volatile as a same-game parlay, but in the long run, it is still in the house's favor. The next question is whether the casino margins can outlast the cultural dominance of sports betting in the U.S. ^[1] over time.

The Pricing Logic and Variance

Sportsbooks set their lines to create a balance of bets and avoid the sharp bettors. For instance, if the NBA market total is 215 points with -110 odds on both sides, it means that the probability of a point is 52.4% plus vig. When the bettor bets on the over for $100, he will get a $90.91 profit upon winning. The vig is the sportsbook's strategy to make money no matter what the game's Variance is. 

Online casinos, however, don't use balancing action. If a slot machine has a 96% return-to-player (RTP), it will have a 4% margin over time. Casino prices do not change with public opinion or injury reports, as is the case in the sports market. This structural difference makes it more predictable that casinos make money ^[2].

The Reason Bettors Believe Sports Betting Will Continue to Gain Traction

Many bettors feel that they have a cultural affinity for sports betting and will continue to be its number one choice. NFL Sundays, March Madness, and the World Series are part and parcel to American culture, and the act of betting is an extension of the fandom. The psychology of the payouts is also a factor. 

Making a $10 stake at +200 odds for a $20 payout is more realistic than the small amounts of casino rewards that are received. This impression is only enhanced by social media, as it highlights big parlay winners and further cements the notion that NFL betting can pay off in big ways. The belief is reinforced by the recency bias, as bettors tend to remember the big wins, such as an underdog winning the UFC at +400, and forget about the Variance that is inherent in the odds of betting ^[3].

Economics of Hold and Growth as It Relates to the Industry

Regulated sportsbooks in the United States typically have a 7–10% hold on sports betting ^[1]. The margins online casinos can maintain are determined by the game mix and range from 3–5% with much higher volumes ^[4]. Same-game parlays can be a good way for sportsbooks to make money, but they're based on the psychology of bettors. After each possession in an NFL or NBA game, the odds will change, creating more excitement but with the drawback of volatility. 

Casino economics, on the other hand, produces a regular income without the need for market-making. Some states, such as Michigan and New Jersey, already have online casino revenue outstripping sports betting in some months ^[4][5]. This is evident in niche markets such as MLS betting, where sportsbooks are able to make a profit during the season but not necessarily during the rest of the year, whereas casinos have a steady margin throughout the year.