The Inverse Relationship Between Handle and Hold for Online Sportsbooks

There’s long been a sentiment in the sports betting community, one not necessarily shared by operators, about an inverse relationship between handle and hold: The more money sportsbooks take from bettors today, the less customers have to play with tomorrow.

It may have taken plummeting stock prices for operators to come around to this thinking.

In its Q4 2025 earnings report, Flutter revealed that handle growth at FanDuel decelerated to just 3%, far off market expectations. Hold during NFL season, meanwhile, was a robust 19%.

On Friday, Feb. 27, a day after the earnings call, Flutter stock sank to a low of $99.96, a staggering 18.8% decline from the previous day’s close and the first time it dipped below $100 since the company’s listing on the NYSE in January 2024.

It’s a similar story at DraftKings, where handle growth slowed to 4% in January, a result attributed to a high hold percentage; the operator won 16% of the money wagered during football season. DraftKings stock is down nearly 50% since six months ago.

Online Sportsbooks Took SGPs ‘Too Far’

Quarter after quarter, operators keep hammering home same game parlays. The high-hold products, they tell investors, are key to sustaining growth as the expansion of legal sports betting plateaus. 

A too-high-hold model, though, is not sustainable, especially at a time when new state launches are drying up.

“I think it just bit ‘em. I think they took it too far,” Davis Catlin, managing partner of Discerning Capital, told Gambling Insider of sportsbooks’ reliance on SGPs. “This is a well-known phenomenon where they’ve been eating on both sides, and it just caught them.

“I don’t think a hold in the high teens is sustainable anywhere in gambling,” added Davis, whose firm invests in companies in the regulated gambling space. “I think you need to run somewhere around low teens at the highest.”

“‘It’s discouraging when you get your ass kicked,” said the American Bettors’ Voice board member known as Sigma Squirrel, loosely paraphrasing Flutter CEO Peter Jackson’s comments on “very strong margins … that impacted customers.”

“When you get woodshedded, it’s not fun,” Squirrel continued. “Well, no kidding. If customer growth is slowing and hold is in the twenties or high teens, they are going to kill the golden goose themselves. So I think we’ve hit peak SGP.”

Multiple Reasons for Slower Handle Growth, and Prediction Markets are One of Them

There are, of course, multiple reasons for slower handle growth. Prediction markets are a factor, though there’s debate about how much of one, and Jackson spoke of less compelling “player narratives” than in NFL season’s past, part of the randomness of sports that also may help explain higher holds. The larger force is fewer opportunities to launch in new states, and inflation cuts into discretionary spending.

Sports betting companies acknowledge the reality of moderated handle growth, and it’s changing how they forecast.

“The way we would always come up with estimates is you gotta assume some type of handle growth, some type of volume growth, you have to assume some type of hold or margin increase or decrease, and then how do promos fit into that,” explained Chad Benyon, Head of US Research at Macquarie Capital.

Interpreting comments from CEO Jason Robins on DraftKings’ recent earning call, Benyon added:

“They no longer are thinking about that arithmetic as they used to, which kind of means, I believe, we’re probably not gonna see handle growth of 15% like we’ve seen in the past couple of years.”

While Robins cited data indicating prediction markets are having only a slight impact on handle, Sigma Squirrel – whose own betting group has taken the bulk of its action to prediction markets and exchanges – cautions sportsbooks to be cognizant of other platforms.

“We appear to be in a market where customer acquisition for the OSBs could be slowing down for a variety of reasons,” he said. “I think the biggest one is just competition for that handle is extraordinarily diffuse now. There’s so many places a consumer can take risk. I don’t say make bets, I say take risk.That’s the way I look at it as someone in this market. I can take risk on all sorts of outlets.”

Finding the Sweet Spot

Despite the handle vs. hold inverse relationship we’re discussing here, sportsbooks will continue to lean into same game parlays. For sustainability’s sake, they’ll need to price them right.

Serve up SGPs, in other words, like Goldilocks likes her porridge – not too hot, not too cold.

“As someone who’s an insider looking at these sorts of things, there is a clear relationship with how much you take from a player and how long and how much you’re willing to play,” Catlin emphasized. 

The investor offered a theoretical example of a slot company holding 10%. “You see less volume go through those games and often less total dollars won than when you set the return to player at a 98%,” he conveyed.

“Where [customers] win more, they play more, they’re more engaged, they enjoy it more. Because the variability doesn’t eat them alive. It’s not a one-way thing.”

Flutter’s Jackson suggested improving the company’s “generosity strategy” to keep bettors more engaged. That means returning, via bonuses, more of the money the company wins back to customers.

“There has to be a tipping point where players look at their accounts and it’s just not as fun as it had been,” said Benyon. “I think that’s the true magic of this industry, whether it’s land-based or digital.  

“There is a randomness in terms of when you win and when you lose. The hold rate needs to be low enough that the customer still feels like they have a good chance of winning.”