# Sportsbook Definition: What a Sportsbook Is and How It Makes Money

Published: 2026-03-29
Author: Warren Team
URL: https://www.heywarren.com/blog/sportsbook-definition

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A **sportsbook** is a business that accepts wagers on sporting events, setting odds, taking bets, and paying out winnings. In the United States, legal sportsbooks operate in states that have authorised sports betting (following the Supreme Court's 2018 *Murphy v. NCAA* decision striking down PASPA). Both retail sportsbooks (physical locations, often in casinos) and online/mobile sportsbooks (apps like DraftKings, FanDuel, BetMGM, Caesars Sportsbook) accept bets on sports ranging from NFL and NBA to soccer, tennis, golf, eSports, and political events in some jurisdictions. Sportsbooks don't need to predict outcomes correctly to profit, they make money by setting odds that create a mathematical edge (the "vig" or "juice") regardless of which team wins. Understanding how sportsbooks work, how they set odds, and how they profit from every bet is useful for bettors, investors in gaming companies, and anyone analysing the sports betting industry.

## How Sportsbooks Make Money: The Vig (Juice)

Sportsbooks profit primarily through the **vigorish** (vig or juice), a commission built into every bet's odds:

![With balanced action at -110, a sportsbook collects $220, pays out $210, and keeps $10, a ~4.5% hold on every spread bet.](data:image/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20875%20125%22%20width%3D%22875%22%20height%3D%22125%22%20role%3D%22img%22%3E%3Ctitle%3EFlow%20diagram%3C%2Ftitle%3E%3Crect%20width%3D%22100%25%22%20height%3D%22100%25%22%20fill%3D%22%23f8fafc%22%2F%3E%3Crect%20x%3D%2230%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22115%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EBettor%20A%3C%2Ftext%3E%3Ctext%20x%3D%22115%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3ERisks%20%24110%3C%2Ftext%3E%3Cline%20x1%3D%22205%22%20y1%3D%2262.5%22%20x2%3D%22237%22%20y2%3D%2262.5%22%20stroke%3D%22%2364748b%22%20stroke-width%3D%222%22%2F%3E%3Cpolygon%20points%3D%22244%2C62.5%20235%2C57.5%20235%2C67.5%22%20fill%3D%22%2364748b%22%2F%3E%3Crect%20x%3D%22245%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22330%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3ESportsbook%3C%2Ftext%3E%3Ctext%20x%3D%22330%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3ECollects%20%24220%3C%2Ftext%3E%3Cline%20x1%3D%22420%22%20y1%3D%2262.5%22%20x2%3D%22452%22%20y2%3D%2262.5%22%20stroke%3D%22%2364748b%22%20stroke-width%3D%222%22%2F%3E%3Cpolygon%20points%3D%22459%2C62.5%20450%2C57.5%20450%2C67.5%22%20fill%3D%22%2364748b%22%2F%3E%3Crect%20x%3D%22460%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22545%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EWinner%20paid%3C%2Ftext%3E%3Ctext%20x%3D%22545%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3E%24210%20out%3C%2Ftext%3E%3Cline%20x1%3D%22635%22%20y1%3D%2262.5%22%20x2%3D%22667%22%20y2%3D%2262.5%22%20stroke%3D%22%2364748b%22%20stroke-width%3D%222%22%2F%3E%3Cpolygon%20points%3D%22674%2C62.5%20665%2C57.5%20665%2C67.5%22%20fill%3D%22%2364748b%22%2F%3E%3Crect%20x%3D%22675%22%20y%3D%2225%22%20width%3D%22170%22%20height%3D%2275%22%20rx%3D%2210%22%20fill%3D%22white%22%20stroke%3D%22%232563eb%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22760%22%20y%3D%2258.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EVig%20kept%3C%2Ftext%3E%3Ctext%20x%3D%22760%22%20y%3D%2278.5%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2211%22%20fill%3D%22%2364748b%22%3E%2410%20profit%3C%2Ftext%3E%3C%2Fsvg%3E)

*With balanced action at -110, a sportsbook collects $220, pays out $210, and keeps $10, a ~4.5% hold on every spread bet.*

**Example, point spread betting**:
- Both teams pay **-110** odds (standard American odds) for a point spread bet
- To win $100, a bettor must risk $110
- If perfectly balanced: $110 wagered on Team A, $110 on Team B
- Sportsbook pays out $210 to winners (their $110 stake + $100 profit) and keeps $110 from losers
- **Net profit to sportsbook**: $220 collected − $210 paid = **$10 on $220 in action ≈ 4.5% hold**

**The hold percentage**: Most retail and online sportsbooks target a hold of 4.5%–7% on spread bets, and higher (8%–15%) on parlays and prop bets.

**Understanding American odds**:

| Odds | Meaning | Example Payout on $100 bet |
|---|---|---|
| -110 | Risk $110 to win $100 | $190.91 total returned |
| -150 | Risk $150 to win $100 | $166.67 total returned |
| +130 | Risk $100 to win $130 | $230 total returned |
| +300 | Risk $100 to win $300 | $400 total returned |

The implied probability of a -110 line is 52.4%. If bettors must be right 52.4% of the time just to break even, and truly fair odds should be -100 (50% implied), the 2.4% gap represents the sportsbook's built-in edge.

## Types of Bets at a Sportsbook

**Point spread (spread bet)**: One team is favoured by a certain number of points. The favourite must win by more than the spread; the underdog must either win outright or lose by less than the spread.

![The six main bet types offered by US sportsbooks, from simple moneylines to multi-leg parlays.](data:image/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20viewBox%3D%220%200%20760%20211%22%20width%3D%22760%22%20height%3D%22211%22%20role%3D%22img%22%3E%3Ctitle%3EHierarchy%3C%2Ftitle%3E%3Crect%20width%3D%22100%25%22%20height%3D%22100%25%22%20fill%3D%22%23f8fafc%22%2F%3E%3Crect%20x%3D%22300%22%20y%3D%2220%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22%232563eb%22%2F%3E%3Ctext%20x%3D%22380%22%20y%3D%2254%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2214%22%20font-weight%3D%22700%22%20fill%3D%22white%22%3ESportsbook%20Bets%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20110%20105.5%20L%20110%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%2230%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22110%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EMoneyline%3C%2Ftext%3E%3Ctext%20x%3D%22110%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3EPick%20the%20winner%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20290%20105.5%20L%20290%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22210%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22290%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EPoint%20Spread%3C%2Ftext%3E%3Ctext%20x%3D%22290%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3EWin%20by%20margin%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20470%20105.5%20L%20470%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22390%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22470%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3ETotal%20%28O%2FU%29%3C%2Ftext%3E%3Ctext%20x%3D%22470%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3ECombined%20score%3C%2Ftext%3E%3Cpath%20d%3D%22M%20380%2078%20L%20380%20105.5%20L%20650%20105.5%20L%20650%20133%22%20stroke%3D%22%23cbd5e1%22%20stroke-width%3D%222%22%20fill%3D%22none%22%2F%3E%3Crect%20x%3D%22570%22%20y%3D%22133%22%20width%3D%22160%22%20height%3D%2258%22%20rx%3D%228%22%20fill%3D%22white%22%20stroke%3D%22%230891b2%22%20stroke-width%3D%222%22%2F%3E%3Ctext%20x%3D%22650%22%20y%3D%22158%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2213%22%20font-weight%3D%22600%22%20fill%3D%22%230f172a%22%3EParlay%3C%2Ftext%3E%3Ctext%20x%3D%22650%22%20y%3D%22176%22%20text-anchor%3D%22middle%22%20font-family%3D%22system-ui%2C-apple-system%2Csans-serif%22%20font-size%3D%2210%22%20fill%3D%22%2364748b%22%3E15%E2%80%9320%25%20hold%3C%2Ftext%3E%3C%2Fsvg%3E)

*The six main bet types offered by US sportsbooks, from simple moneylines to multi-leg parlays.*

**Moneyline**: Simply pick the winner. Favourites have negative American odds; underdogs have positive odds.

**Totals (over/under)**: Bet on whether the combined score will be over or under a specified number.

**Futures**: Bets on outcomes far in advance, Super Bowl winner, MVP, season win total.

**Parlays**: Multiple bets combined; all must win for the parlay to pay. Higher potential payouts but sportsbooks hold significantly more (15%–20%) on parlays.

**Props (proposition bets)**: Bets on specific in-game events, passing yards by a quarterback, first scorer, number of three-pointers, etc. Props have become enormously popular post-legalization.

**Live/in-play betting**: Bets placed during a game with real-time odds updates.

## Major US Sportsbooks (2024–2026)

| Operator | Market Share (US handle) | Key Markets |
|---|---|---|
| FanDuel | ~37% | 25+ states |
| DraftKings | ~27% | 25+ states |
| BetMGM | ~11% | 25+ states |
| Caesars Sportsbook | ~7% | 25+ states |
| ESPN Bet | ~4% | Growing rapidly |
| Hard Rock Bet | ~3% | FL, NJ, VA |

**US sports betting handle** (2023): ~$119 billion in total bets placed across all legal states

**Gross gaming revenue** (GGR): ~$11 billion in 2023 (GGR = total bets × hold percentage)

## US Sports Betting Legality

Following *Murphy v. NCAA* (2018), states individually decide whether to legalise sports betting:
- **Legal and operational** (as of 2025): ~38 states + Washington DC
- **Banned or no law**: ~12 states (including Utah, Texas, California as of 2025)
- **Federal oversight**: No federal sports betting law; each state regulates independently
- **Age requirement**: 21+ in most states; 18+ in a few (Montana, New Hampshire)

## Sportsbook vs. Casino vs. Fantasy Sports

| Type | What's Wagered | Regulation | Skill vs. Chance |
|---|---|---|---|
| Sportsbook | Sporting event outcomes | State gaming commissions | Mix (line shopping has skill) |
| Casino | Table games, slots | State gaming commissions | Primarily chance |
| Daily Fantasy Sports (DFS) | Player performance statistics | Many states classify as skill game | Significant skill element |

DFS operators (DraftKings, FanDuel) transitioned from pure DFS into full sportsbooks after the 2018 ruling.

## Authoritative Sources

For deeper background and primary-source data on this topic, the following authoritative sources are useful starting points:

- [IRS](https://www.irs.gov/)
- [SEC](https://www.sec.gov/)

## Conclusion

A sportsbook accepts sports wagers and profits through the vig, a mathematical edge built into odds that generates income regardless of which team wins, as long as the book is approximately balanced. The US legal sports betting market exceeded $119 billion in handle in 2023 and continues to expand as more states legalise. For related financial and investment concepts, see our guides on [serial entrepreneurs](/blog/serial-entrepreneurs) and [most successful Shark Tank products](/blog/most-successful-product-on-shark-tank).

Warren at [heywarren.com](https://heywarren.com) helps investors, analysts, and consumers understand the sports betting industry, sportsbook economics, and the financial mechanics behind how online and retail sportsbooks generate revenue.

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## Related Reading

**More from Warren**:
- [Serial Entrepreneurs: Who They Are and What Research Says About Repeat Founders](/blog/serial-entrepreneurs)
- [Most Successful Products on Shark Tank: Top Deals by Revenue](/blog/most-successful-product-on-shark-tank)
- [What Is GMV: Gross Merchandise Value in E-Commerce](/blog/what-is-gmv)

**Authoritative sources**:
- [American Gaming Association, Sports Betting](https://www.americangaming.org/research/state-gaming-map/)
- [NCAA, Murphy v. NCAA Overview](https://www.ncaa.org/sports/2018/10/2/sports-wagering.aspx)
- [Legal Sports Report, State-by-State Tracker](https://www.legalsportsreport.com/sports-betting/state-by-state/)