Sports bettors are a lot more confident than they should be
Summary
Study finds that the average bettor expects to to make a little money on future bets, even though they lose an average of 7.5 cents per dollar.
Hope springs eternal for sports bettors, as they typically expect to break even on future wagers even when they have consistently lost money in the past.
Now we know roughly how overconfident many gamblers are. A new study by Stanford University researchers finds that the average online sportsbook customer expects a gain of 0.3 cent for every dollar wagered. In reality, sports bettors lose an average of 7.5 cents per dollar wagered, reflecting “widespread overoptimism about financial returns," according to Matthew Brown, a Stanford doctoral student and lead author of the study.
To qualify for the study, conducted between March 8 and June 10, 2024, participants had to report that they bet on sports at least weekly and wagered at least $100 in the past month. In the 30 days before the study began, the median participant wagered $153 a week, though more than 25% of participants bet more than $1,000 a week. The median participant placed 17.4 bets a week at an average bet size of $10.30.
The pool of 444 subjects completed three surveys over two months where they were asked to recall their net winnings per $100 wagered over the past few months and to predict their future returns. Participants also synced their online sportsbook accounts with the study’s online portal, allowing researchers to observe their betting activity.
Optimism reigns
The findings: 10% of bettors were overly optimistic about their potential winnings by more than 20 cents per dollar wagered; 80% were also found to be overly optimistic, but not to the same degree as the most overoptimistic; and the remaining 9% of bettors underestimated their actual future returns.
“We found that people more or less understood the amount of money they had lost in the past, but they just thought the future would be better," Brown says.
Bettors participating mostly in parlays—long-shot bets that require multiple correct predictions to win but offer higher payouts than simple wagers—were especially bad at predicting future success. These bettors were an average of 18 cents per dollar more overly optimistic than bettors who rarely played parlays, the study found.
In the study, 32% of participants wagered most of their dollars on parlays, Brown says.
Parlay bettors do so much worse than single-outcome bettors and are so much more overconfident in their chances that they likely account for most of the excessive optimism in the overall sample, Brown says.
Check the odds
The American Gaming Association, the industry’s trade group, notes that online sportsbooks clearly display both the potential payout and odds of winning before customers place their bets, including complex bets like parlays.
Neither the AGA nor sportsbooks DraftKings, FanDuel, BetMGM, ESPN Bet, Caesars and Hard Rock Bet would comment on how the Stanford research compares with their customer data.
The study also found that 20% of participants reported betting too much. To promote responsible gambling, online sportsbooks have rolled out features making it easy for users to track their results over time. But since most sports bettors are overly optimistic about their future betting, those measures likely won’t do much to curb problematic gambling, Brown says.
“Even when bettors know their past losses, they remained optimistic about the future, so that particular approach to consumer protection might not be enough," he says.
Nick Fortuna is a writer in Ocala, Fla. He can be reached at reports@wsj.com.
