The old adage says, “The House Always Wins.” While this is mathematically true over an infinite timeline, the reality of running a sportsbook, being an affiliate, or managing a Pay-Per-Head (PPH) sheet is far more complex.
Short-term variance can be brutal. A sportsbook with low volume can easily have a losing week or month, even with a mathematical edge. Our Sportsbook Revenue Simulator helps you model the business side of betting. It projects your Gross Gaming Revenue (GGR) based on turnover and margin, while also calculating the Volatility—showing you the best and worst-case scenarios based on standard deviation.
Sportsbook Revenue
B2B SimulatorHow to Use the Revenue Simulator
This tool is designed to model financial outcomes for betting operators or affiliates projecting their commissions. Here is how to configure the simulation:
- Enter Total Handle (Turnover): This is the total dollar amount wagered by all players.
- Note: Revenue is derived from Handle, not deposits.
- Set Theoretical Hold (Margin): This is the mathematical edge the sportsbook has built into the odds.
- Sharp (2.5%): Low margin books (e.g., -105 lines).
- Standard (4.5%): Standard books (e.g., -110 lines).
- Soft (7.0%+): Recreational books or Prop bets.
- Enter Average Bet Size: This is crucial for calculating Variance.
- Why it matters: Taking $100,000 in handle from ten $10,000 bets carries massive risk. Taking the same handle from 10,000 bets of $10 ensures a smooth, predictable profit curve.
- Analyze the Range: The simulator provides your “Expected GGR” but also displays a confidence interval (Min/Max). If the “Min” value is negative, your business model has a risk of losing money in the short term.
Related Tools: To calculate the exact hold percentage of specific odds, use our Margin Calculator. If you are a player trying to beat the book’s margin, use the No-Vig Calculator to find the true probabilities.
Real-World Scenarios: The Danger of Variance
Why do some bookmakers go bust while others thrive? It often comes down to volume and variance management.
Scenario 1: The “High Roller” Risk
A private bookie takes $50,000 in handle. However, his average bet size is $1,000 (only 50 bets). He operates with a standard 4.5% hold.
- Expected Profit: $2,250.
- Variance Risk: High.
- Result: Because the sample size (50 bets) is so small, standard deviation is huge. The simulator shows he could easily lose -$1,500 or win $6,000. This business model is unstable.
Scenario 2: The “Grind” Model
A commercial sportsbook takes the same $50,000 in handle, but with an average bet size of $10 (5,000 bets).
- Expected Profit: $2,250.
- Variance Risk: Low.
- Result: With 5,000 bets, the Law of Large Numbers takes effect. The range of outcomes tightens significantly. The book is almost guaranteed to profit between $1,800 and $2,700.
Frequently Asked Questions (FAQ)
What is GGR in sports betting?
GGR stands for Gross Gaming Revenue. It is calculated as Total Handle - Winning Payouts. It represents the money the sportsbook keeps before paying operating expenses (taxes, marketing, salaries).
Can a sportsbook lose money?
Yes. While the math ensures profit over millions of bets, a sportsbook can have a losing day, week, or even month if “The Favorites” cover or if a popular public outcome hits. This is known as negative variance.
What is the difference between Handle and Drop?
In sports betting, Handle is the total amount wagered. Drop is a casino term (money exchanged for chips). In online betting, “Turnover” or “Handle” are the standard terms for volume.