The 2023 college football season may only have aged a fortnight, but the reinvigorated Colorado Buffalos under the command of coach Deion “Primetime” Sanders, have already caused a ripple in sportsbook operations through unfavorable hold effects.
Macquarie’s experienced analyst Chad Beynon addressed his clientele today, suggesting nearly a third of all football bets last week could be attributed to college football wagering, with the NFL seizing the major share of 70%. The eruptive congruence of social media buzz and traditional media fervor surrounding Sanders’ force has positioned the Buffalos as an early-season hurdle for sportsbook operators, as highlighted by Beynon.
A phenomenon christened the ‘Deion Sanders effect’ persevered for a consecutive week, with Sanders’ inaugural year as head coach for the University of Colorado spurring a surmountable amount of interest around the team. Consequently, the Buffalos’ face-off against Nebraska attracted an equivalent number of bets as the prime-time Texas/Alabama game.
In a disappointment for sportsbooks, Colorado effortlessly secured the spread against Nebraska with a total overshoot, which is typically preferred by leisure bettors. This outcome followed close on the heels of last week’s surprising victory by the Colorado team, who were 20.5-point underdogs at TCU.
Beynon noted a substantial majority of roughly 80% of the betting public supporting Colorado in the preceding week. Sportsbook operators faced an additional setback in the form of Texas moneyline exposure, as the Longhorns triumphed over Alabama in a road game upset.
While Sanders’ Colorado outift has proven problematic for sportsbook operators in the preceding couple of weeks, gaming companies managed to recoup some of the lost hold in the first week of NFL action.
In the first week of the NFL, Beynon gauged that the hold for single-game betting held by gaming companies hovered around 13% on sided bets and 9% on total bets. This likely caused a dip in single-game parlays (SGPs) as 73% of the games reported undershoots. Road teams securing wins 12-3 against the spread were likely to have given operators a boost.
Calling upon an accepted rule of thumb, Beynon shared, “Every 100 points of hold deviation from the long-term average either adds or docks roughly 14% to the imminent sports betting gross gaming revenue (GGR) growth.”
Within the largest sports wagering market in the country, Flutter Entertainment’s FanDuel held the leading share of holds last month at 10.3%, followed by BetMGM at 9.2%, according to Macquarie. Placing third was WynnBET at 8.9%.
The closing weeks of the third quarter demonstrate a steady hold within the overall industry. Beynon notes a slight rise in the popularity of NFL SGPs, suggesting a kind of safety and reliability for operators who get significant SGP volume.
However, last September saw record high market holds of nearly 12% due to favorable game outcomes. Therefore it should be noted that whilst expectations are high for sequential revenue growth this year in the third quarter, they may be slightly disappointing given that volumes usually dip in Q3.
Finally, Beynon observes that pullbacks on sports betting stocks present promising buying opportunities. He has conferred “outperform” ratings on no less than seven gaming equities, including sportsbook operators like DraftKings and Rush Street Interactive. His price targets suggest a growth of 20% and 16% respectively.