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Analysts at JMP Securities have suggested the continued development of parlay-style bets will work to boost the sportsbook margins of US operators.

Parlays consist of two or more bets combined into a single wager. Each single bet within a larger wager of this type is often termed a “leg”.

US operators have devoted significant resources to improving their parlay offerings, as they have become a growing priority in recent years.

The average number of legs per parlay in the US rose from 4.2 in January 2022 to 5.0 in January 2024, JMP said, highlighting data from betting analytics provider Juice Reel.

The analysts added that the steady improvement in the number of legs per parlay has supported improved betting margins for operators.

For example, DraftKings saw its margin rise by 1.9 percentage points over the period, thanks to the addition of more legs per parlay on average.

Longer parlays driving changes in player behaviour

JMP also argued the increase in leg count has noticeably affected consumer behaviour. Players with a preference for ‘long-shot’ products such as lotteries, for example, have been choosing longer-legged parlays, the analysts said.

As such, they argued operators with solid risk management could bake-in higher margins as parlays continue to become longer on average.

JMP estimated each additional leg of a parlay at the current level would increase margins by 1.3% for FanDuel, 1.1% for DraftKings and 1.0% for BetMGM.

Parlays have evolved into several different betting products in recent years including multi-game and same-game parlays, they added.

JMP said conversations with DraftKings and FanDuel have indicated both consider multi-game parlays to be losing mix share compared to their same-game offerings.

The analysts also noted benefits of scale in this area could have a compounding effect for the largest operators.

JMP said: “FanDuel’s ability to increase gaming margins creates a snowball effect, whereby higher levels of revenue flowing through to contribution profit can be reinvested back into its player base… to strengthen customer loyalty and improve the long-term value of its customers.

“The investment track allows FanDuel, as well as DraftKings, to reinvest at considerably higher rates compared to smaller companies while positioning the businesses for long-term cash flow.”

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