Quote:
Originally Posted by thesloppy
The base of the business model seems pretty foolproof, and probably doesn't require that much analysis: for every $100 of bets they process, they give out ~$80 in winnings.
Like online poker sites, and unlike sportsbook style betting, however much the collective or one individual wins (or loses) has no impact on their profit, since the number of winners is set for each contest, and we're all pulling from the same (mostly) static pool of prize money that is ~20% less than what we've collectively paid in (save the occasional promotional/free teasers). The betting sites are concerned with the amount of money bet, rather than anybody's hit rate.
|
The only problems the smaller sites seem to be having is the cost of marketing since this concept is fairly new and setting their guaranteed prized pools too high which lead to a lot of overlay many times. The vig is closer to 10 percent than 20 also. 100 will pay out 90 and the vig gets smaller with the larger money contests. I think eventually we will see yahoo or ESPN buy out one of the larger companies and make it mainstream.