New DraftKings subscription option pushes parlays even more

A leader in the industry, DraftKings has made more waves when they unveiled a first-of-its-kind subscription service, DraftKings Sportsbook+, targeting parlay-inclined bettors while introducing a new dimension to the sports betting landscape. This initiative is currently being tested with select users in New York. 

Parlay betting is a high-margin product for sportsbooks that appeals to gamblers with a focus on large payouts, despite very low (negative) expected value. So it makes sense why the company would debut this initiative targeting. While the service will likely be an appealing proposition for parlay bettors, it raises questions about gambling behavior, its broader implications and how sportsbooks are taxed.

What is DraftKings’ new subscription service? Where is it offered? 

Launched quietly on December 28, 2024 in New York, DraftKings Sportsbook+ costs $20 per month and offers users “stepped-up” profit boosts for winning parlay bets. Subscribers receive odds boosts that increase based on the number of legs in their parlay wagers. For 2-leg parlays, subscribers receive a 10% boost, for 3-leg parlays, a 20% boost, for 4-leg parlays, a 30% boost, and so on, up to 11+ legs, which creates a 100% boost.

Subscribers can place eligible bets of up to $25 per token, with the only restriction being that no individual leg in the parlay can have odds greater than -500. The first month of the subscription is offered as a free trial, but access is currently limited to select users in New York.

DraftKings has not revealed what makes a customer eligible for this service. However, the company has hinted at the possibility of expanding it to other states if it performs well in New York.

Why would DraftKings create this new offering?

Encouraging more parlay bets

As detailed previously, parlays have become incredibly popular and are one of the (if not the) most profitable betting options for sportsbooks. While bettors are drawn to the allure of big payouts relative to the risk amount, the house has a significant edge because all legs in a parlay must win for the bet to cash and they build in a significant percentage of “vig.”

DraftKings’ subscription model incentivizes bettors to place more parlays. During a recent earnings call, DraftKings reported a 5% year-over-year increase in NFL parlay bets through Week 9 of the season. This rise played a significant role in DraftKings achieving $92 million in EBITDA through the first nine months of 2024 – a stark contrast to its $151 million loss in the same period in 2023.

Offering boosted payouts may appear at first glance to be something that eats into DraftKings’ margins, but it highlights how massive those parlay margins are already if they’re willing to throw bettors a bone with these percentage boost bonuses. Even with the boosts, the house still maintains a significant advantage.

Over half of all U.S. bettors now prefer parlays to straight bets, according to Morgan Stanley, and DraftKings has introduced additional products to capitalize on this trend.

Launched in late 2023, Progressive Parlays allowing partial payouts even if one leg loses, though at reduced odds. When FanDuel introduced Same Game Parlays to the U.S. in 2019, the bet type exploded, and other major sportsbooks, like DraftKings, adapted. Expanded markets for NFL and NBA betting encourage bettors to build multi-leg wagers within the same game. DraftKings also offers Pick6, a daily fantasy product inspired by popular pick’em games.

This strategic focus on parlays has proven highly lucrative. FanDuel reported that parlays now account for 70% of all NBA and NFL betting, and DraftKings is following a similar trajectory. Nonetheless, this shift has raised concerns about the role of sportsbooks in promoting potentially risky (and certainly unwise in terms of expected value) gambling behaviors.

Avoiding taxes?

New York imposes a nation-high 51% tax rate on sports betting revenue, a significant financial burden for operators like DraftKings. However, subscription revenue is not subject to the same tax, making this in part a creative way for DraftKings to offset the impact.

The timing of DraftKings Sportsbook+ is particularly notable. The launch aligns with the original rollout date of the company’s controversial “winning bet surcharge,” which proposed taxing bettors directly to cover high state taxes. Following public backlash, DraftKings quickly scrapped the surcharge idea, but the subscription model may serve as a less contentious alternative.

In a statement, DraftKings CEO Jason Robins said that high tax rates would be addressed through "other measures," including adjustments to marketing strategies and promotional offerings. The introduction of DraftKings Sportsbook+ appears to be one such approach.

Are the benefits worth the cost for bettors to pay for the subscription?

The subscription service offers unique perks for bettors who frequently place parlays, but its value depends heavily on betting habits and outcomes. The potential for higher payouts on winning parlays is the primary draw. Still, bettors must win a portion of their parlays each month to justify spending $20 on the subscription.

Because the maximum eligible bet for each token is $25, even with a 100% boost, the potential profit may not cover the subscription cost unless users place – and win – many parlays. Multi-leg parlays are significantly harder to win than straight bets. The subscription model encourages riskier betting behavior, so bettors should consider whether they are truly gaining value from the service or simply being nudged toward higher-risk wagers.

Gambling Addiction: Specialized support and treatment 

The introduction of DraftKings Sportsbook+ highlights the gambling industry’s increasing popularity of high-risk, high-reward, low expected-value betting products. For some, the appeal of boosted payouts and multi-leg parlays may lead to a spiral into more problematic gambling behavior, leading to financial stress and potential addiction.

At Birches Health, evidence-based care is offered from the comfort of home to help individuals regain control of their lives. Covered by insurance, Birches’ services include one-on-one counseling, peer support and free group sessions. You can schedule an initial consultation with Birches by clicking here. You can also call 833-483-3838 or email help@bircheshealth.com to begin the path toward recovery.