Sports betting is everywhere. From commercials during major games to sportsbook logos inside stadiums and promotions promising bonus bets, companies like DraftKings and FanDuel have made placing a wager easier and more accessible than ever.
And Americans are putting a lot of money on the line. In 2025, Americans legally wagered $166.94 billion on sports, an 11% increase from the year before. Sportsbooks generated a record $16.96 billion in revenue from that activity, up 22.8%.
The industry is still bringing in billions in 2026. During the second quarter alone, sportsbooks generated $3.91 billion in revenue from $38.84 billion wagered, according to the American Gaming Association.
So, where does all that money come from?
Sportsbooks don’t need every customer to lose every bet. Instead, the odds, promotions, betting limits, and even some features built into betting apps can help give sportsbooks an advantage over time.
Here’s a closer look at how the business of sports betting works and what consumers should know before putting their money on the line.
That “Free” Bet May Not Really Be Free
Deposit $1,000 and get a $1,000 bonus bet. Sounds like free money, right? Not exactly. Sportsbook promotions can come with specific terms that affect how much the offer is actually worth. With some bonus bets, for example, the value of the bonus itself isn’t returned when you win. You may only receive the winnings.
Other promotions can have eligibility requirements, expiration dates, minimum odds, withdrawal restrictions, or other conditions. Just like other financial offers, like guaranteed approval loans that sound too good to be true, it’s important to read the fine print before putting your money down.
That doesn’t necessarily make a sportsbook promotion a bad deal. But it does mean a “$1,000 bonus” isn’t necessarily the same thing as having another $1,000 in cash. Before depositing money based on a promotion, check the terms to understand exactly what you’re getting and what you have to do to use it.
The Math Gives Sportsbooks an Edge
One of the biggest advantages sportsbooks have is built directly into the odds. Take a common -110 betting line. At those odds, you’d need to wager $110 to earn $100 in profit.
That also means you don’t simply need to win half of your bets to break even. You’d need to win approximately 52.38%:
110 ÷ (110 + 100) = 52.38%
That extra 2.38 percentage points may not sound like much, but over hundreds or thousands of wagers, it can make a significant difference.
This built-in advantage is commonly called the vig, short for vigorish. Essentially, it’s part of the sportsbook’s margin.
And across billions of dollars in bets, those margins add up. In 2025, U.S. sports betting revenue reached $16.96 billion on $166.94 billion in wagers. Revenue increased 22.8% from the year before, while the amount wagered increased 11%.
More recent numbers show sportsbooks are continuing to keep a sizable portion of wagers as revenue. In Q2 2026, sportsbooks reported a 10.1% hold, meaning about 10 cents of every dollar wagered remained with sportsbooks as revenue during the quarter.
Sportsbooks Spend Big Money Getting Your Attention
If it seems like sportsbook advertisements are everywhere, there’s a reason. Major operators spend more than a billion dollars a year on sales and marketing.
In 2025, DraftKings spent approximately $1.38 billion on sales and marketing, up about 9% from $1.26 billion in 2024. The company said the increase was primarily due to higher advertising costs.
FanDuel’s numbers are a little different because the company is owned by Flutter Entertainment, which operates several gambling brands around the world. Flutter reported $3.68 billion in sales and marketing expenses globally in 2025, up 15% from $3.21 billion in 2024.
But we can get a little closer to FanDuel by looking specifically at Flutter’s U.S. operations, which include FanDuel and TVG. The company reported approximately $1.32 billion in U.S. sales and marketing expenses in 2025, compared with $1.28 billion in 2024.
Promotions such as bonus bets, odds boosts, deposit offers, and other incentives are another part of that strategy. They’re designed to encourage people to sign up, deposit money, and continue using the platform.
What Happens if You Keep Winning?
Winning doesn’t necessarily mean you’ll always be allowed to keep betting the same amount. Sportsbooks manage their financial risk, and one way they can do that is by adjusting how much an individual customer is permitted to wager.
That means some bettors may encounter lower maximum wagers or other account restrictions. Promotional offers can also differ from one customer to another.
It’s an important distinction because the sportsbook ultimately controls the platform. It determines the odds it offers, the maximum wagers it accepts, and which promotions are available to individual customers.
Sports Betting Apps Make It Easy To Keep Betting
There’s another part of the equation that has little to do with picking the winning team: how easy it is to place another wager.
Sports betting apps can offer live betting, constantly changing odds, same-game parlays, odds boosts, profit boosts, and other features that create more opportunities to bet.
Live betting is a good example. Instead of placing a wager before the game and waiting for the outcome, bettors can place additional wagers as the game unfolds.
That convenience can also mean more opportunities to lose money. Every additional wager exposes a bettor to the sportsbook’s built-in margin again. Even relatively small bets can add up when they’re being placed repeatedly, especially if that spending isn’t accounted for in your monthly budget.
And betting activity continues to grow. In Q2 2026 alone, Americans placed $38.84 billion in legal sports wagers, up 7.8% from the same quarter a year earlier.
You’re Not Working With the Same Information as the Sportsbook
Sportsbooks don’t set their lines by guessing which team might win. They use statistical models, large amounts of betting and sports data, technology, oddsmakers, and risk-management systems to establish and continually adjust their odds.
Those odds may also change as new information becomes available or money comes into the sportsbook. For the average person placing bets from their phone, consistently overcoming both that information gap and the sportsbook’s built-in margin can be difficult.
What To Know Before Placing Your Next Bet
Sportsbooks don’t need to predict every game correctly to make money. Their business model is designed to generate revenue from betting activity over time.
The latest full-year numbers show just how large that business has become. In 2025, Americans legally wagered $166.94 billion on sports while sportsbooks generated $16.96 billion in revenue. State-regulated sportsbooks also generated $3.71 billion in taxes, up 32.4% from the year before.
For consumers, understanding this business model can put sportsbook promotions and betting features into perspective.
Before placing a wager, consider the actual odds, read the terms of any promotion, and decide how much money you can afford to lose before you start betting, not after.
And remember that gambling losses aren’t something you should try to fix by placing another bet. If betting has already contributed to financial problems, focus on ways to manage and get out of debt rather than trying to win the money back.
If you’re dealing with an unrelated expense while trying to get your finances back on track, you can also learn about how personal loans work and whether borrowing makes sense for your situation.
If gambling is affecting your finances or becoming difficult to control, help is available. The National Problem Gambling Helpline offers free, confidential support by calling 1-800-GAMBLER.
Knowing how sportsbooks make their money won’t change the odds. But it can help you understand exactly what you’re agreeing to before you put your own money on the line.
