What Are Licensed Sportsbooks?
Legal Sports Betting Explained for Beginners
Learn how licensed online sportsbooks work, what you can bet on, and how to bet legally in the US
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What Are Online Sportsbooks?
Sportsbooks are businesses that accept wagers on approved sporting events. They publish betting markets - specific outcomes available to wager on - such as:
- Who will win the game?
- Will the teams combine for more or fewer than 47.5 points?
- Will a quarterback throw at least two touchdown passes?
- Will a team win the championship?
The sportsbook attaches a price, or odds, to the available outcomes. The bettor then chooses an outcome, decides how much money to risk, and submits the wager.
Once the sportsbook accepts it, the wager becomes an open bet governed by the market terms and the sportsbook's rules. After the relevant result is known, the sportsbook grades the wager as won, lost, pushed, voided or another applicable settlement status.
What is a licensed sportsbook?
A licensed sportsbook operates within a regulatory framework that authorizes it to offer sports wagering in a particular jurisdiction.
In the United States, sportsbooks are licensed at the state or tribal level. The rules covering available sports, minimum age, account verification, payment methods and permitted bet types depend on where the bettor is physically located.
That doesn't mean, however, that all sportsbooks you will come across online are licensed. There are dozens of online sportsbooks that operate illegally from outside the US, commonly called offshore sportsbooks.
These sites, however, operate outside the U.S. regulatory system and do not provide the same state-level protections as licensed operators. Therefore, we do not cover them in this guide, and highly recommend avoiding them at all costs.
This guide explains how legal online sports betting works, what you can bet on, what is available where you live, and how to get started with a licensed sportsbook.
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The Basic Idea Behind Sports Betting
Online sports betting is the process of placing a wager on a sporting event through a website or mobile app. A licensed sportsbook posts the available markets, sets the odds, accepts eligible bets and grades them once the event is over.
You choose a market, decide how much to risk and submit the wager. If the sportsbook accepts it, the price and stake are locked in. The result is then settled under that market’s rules.
The Six Steps of a Sports Bet
Suppose the Buffalo Bills are playing the Kansas City Chiefs. The sportsbook may offer dozens or hundreds of ways to bet on the game, including the winner, point spread, total points, player statistics and events that happen during the game.
For a simple example, consider only the winner:
- Kansas City Chiefs: -150
- Buffalo Bills: +130
These are moneyline odds. The bettor is choosing which team will win the game.
The -150 and +130 numbers are the prices attached to the two possible selections.
Those prices affect how much the bettor can win and also communicate information about how likely each outcome is considered to be.
Suppose the bettor selects Buffalo at +130.
The selection is then added to the bet slip, where the bettor can enter the amount they want to risk.
If the bettor stakes $20 and the sportsbook accepts the wager at +130, the terms of that ticket are now established.
The bettor has risked $20 for the chance to make $26 in profit.
The potential total return is $46:
- $20 original stake
- $26 profit
- $46 total return
A submitted wager is not necessarily accepted instantly in every situation.
Prices can change, markets can close, and a sportsbook can reject or limit a wager before acceptance. What matters is the final ticket showing the wager the sportsbook actually accepted.
After the game, the market is settled according to its rules.
If Buffalo wins, the +130 Buffalo moneyline wins. If Kansas City wins, it loses.
Other markets can require more detailed settlement. A player prop, for example, may depend on an official statistical result rather than simply the final score.
If Buffalo wins, the bettor receives the $46 total return.
If Buffalo loses, the $20 stake is lost.
A Simple Sportsbook Bet From Start to Finish
Consider another bettor who believes the Chiefs will beat the Bills.
The useful question is not merely whether the bettor thinks Kansas City will win. The sportsbook has attached a price to that prediction.
At -150, a $150 stake would produce $100 in profit if Kansas City won, for a $250 total return.
At a different price, the same prediction becomes a different financial proposition.
That is why experienced bettors pay attention to both sides of the wager:
- What do I think will happen?
- What price am I being offered for that outcome?
Beginners naturally concentrate on the first question. However, understanding the second is one of the biggest steps toward understanding sports betting itself.
What Can You Bet On at a Sportsbook?
Sportsbooks offer hundreds of individual markets, covering individual games, player performances, tournaments, seasons and events that occur while a game is in progress.
Most wagers, however, are built from a relatively small number of bet types. The main difference between them is what has to happen for the bet to win.
Sports Bet Types Explained
A moneyline is the simplest bet on the final result: you choose which team or participant will win the event outright.
There is no point spread to cover. If your selection wins according to the market rules, the bet wins.
Favorites usually carry negative odds, while underdogs usually have positive odds. In events where a draw is possible, sportsbooks may offer either a three-way moneyline that includes the draw as a separate selection or different settlement rules depending on the market.
Example:
If the Buffalo Bills are +130 to beat the Kansas City Chiefs, a $20 Bills moneyline bet returns $46 if Buffalo wins: your $20 stake plus $26 profit.
Pro Tip: Check whether the market includes draws, overtime or extra innings before betting.
A point spread adds a handicap to the final score to make the two sides more evenly priced.
Instead of simply choosing the winner, the bettor wagers on whether a team will finish above or below the specified margin after the spread is applied.
The favorite receives a negative spread and must win by more than that number to cover. The underdog receives a positive spread and can either win outright or lose by less than the spread.
For example:
Philadelphia Eagles -3.5
An Eagles spread bet requires Philadelphia to win by at least four points for the wager to win.
If the opposing team is +3.5, that bet wins if the opponent wins outright or loses by three points or fewer.
A total, often called an over/under, is a bet on whether the combined score or another stated statistic will finish above or below the number set by the sportsbook.
For a full-game total, that usually means the combined score of both teams. You are betting on how much scoring occurs rather than who wins.
Example:
If an NFL game's total is 47.5:
Over 47.5 wins with 48 or more combined points.
Under 47.5 wins with 47 or fewer.
Totals are not limited to full games. Sportsbooks can also offer team totals, player totals and totals for individual halves, quarters or periods.
A prop, short for proposition bet, is a wager on a specific player, team statistic or event within a game rather than the basic final-game outcome.
Common prop markets include:
- a quarterback's passing yards
- a basketball player's points
- a baseball player's home runs
- which team scores first
- how many goals a player records
They can look simple, but the settlement rules are often highly specific. Player participation requirements, official statistics and stat corrections can all affect settlement.
Pro Tip: If you're new to betting, you will want to read the exact market wording and relevant house rules, particularly for player props.
A future is a wager on an outcome that will not be decided until later, usually at the end of a tournament, season or awards race.
Examples include:
- Los Angeles Dodgers to win the World Series
- A team to win its division
- A player to win an MVP award
- A golfer to win a major championship
Futures generally remain open much longer than ordinary game bets, and their odds can change considerably as the season or competition develops.
A futures bet is settled at the price you accepted when the wager was placed, even if the sportsbook later offers very different odds on the same outcome.
A parlay combines two or more selections, known as legs, into a single wager.
The sportsbook combines the odds from each leg to create a larger potential return. In exchange, every required leg needs to win for the parlay itself to win.
For example, a bettor might combine:
- Bills -150
- Eagles -3.5 -110
- Celtics +130
If all three win, the parlay wins. If one loses, the entire standard parlay loses.
The larger displayed payout can make parlays attractive, but adding more legs also makes it increasingly difficult for every required outcome to occur.
A same-game parlay combines multiple selections from the same sporting event rather than using bets from several different games.
For example, an NFL same-game parlay might combine:
- Chiefs moneyline
- Patrick Mahomes Over 1.5 passing touchdowns
- Travis Kelce Over 59.5 receiving yards
Much like regular parlays, all required legs need to win.
The important difference is that selections from the same game can be related to one another. Sportsbooks account for those relationships when calculating the combined odds rather than simply treating every leg as independent.
A teaser is a multi-selection bet that allows you to move point spreads or totals in your favor in exchange for a lower potential payout.
For example, instead of betting:
- Eagles -7
- Bills -6.5
a football teaser might allow the bettor to move both lines by six points:
- Eagles -1
- Bills -0.5
Those adjusted lines are easier to cover, but both selections are still required need to win and the sportsbook will pay you less than it would for a parlay using the original lines.
Teasers are most commonly associated with football and basketball spreads and totals, and the permitted adjustments depend on the sportsbook's rules.
A round robin takes a group of selections and automatically creates multiple smaller parlays from them.
Suppose you choose three teams:
- Bills
- Eagles
- Celtics
A two-leg round robin basically creates three separate parlays:
- Bills + Eagles
- Bills + Celtics
- Eagles + Celtics
Because those parlays are separate wagers, one losing selection does not necessarily cause every combination to lose.
That gives a round robin more flexibility than putting all three selections into one standard three-leg parlay, but it also requires multiple stakes because you are placing several bets at once.
Pro Tip: Always check the total amount being risked on a round robin, not just the stake shown for each individual combination.
Live Betting
Live betting, also called in-play betting, allows you to place wagers after a game has started.
Instead of making every decision before kickoff, you can bet based on how the game is actually developing. You might back an NFL team after it falls behind early, take a new game total after seeing the pace of play, or bet on a player's performance once their role becomes clearer.
Most familiar sportsbook markets can be offered live, including moneylines, spreads, totals and player props. Sportsbooks may also introduce shorter-term markets tied to a specific quarter, period, drive, possession or next scoring event.
Live betting allows you to watch the game develop and get a read of the match before deciding whether there is anything you want to bet on, and you can often find great opportunities that did not exist before the event began.
Live betting can offer:
- Bet with real game context: You can see how the matchup is developing, including pace, player usage, tactics and game flow, before making a decision.
- Wait for a better entry point: If you do not like the pregame odds, you can wait to see whether the live market moves to a price or line you prefer.
- Access new markets: Live sportsbooks can offer wagers that did not exist before the event started, including updated team and player totals or bets on specific parts of the game.
- Reassess your original view: Injuries, substitutions, foul trouble, weather or an unexpected game script can change the assumptions you had before the event began.
The trade-off is that live betting moves much faster than pregame betting. Live odds continuously adjust to factors such as the score, time remaining, possession, injuries and pace of play, so you usually have less time to evaluate a wager before the available price changes.
How Sportsbook Odds and Payouts Work
Sportsbook odds are the price attached to a bet. They determine how much you can win, but they also tell you how likely an outcome is considered to be at that price.
This is one of the most important concepts for a new bettor to understand: Betting on the right team is only half of the decision. The price you accept determines what you are risking relative to what you can win.
For example:
Betting $100 on the Buffalo Bills at +150 produces $150 in profit if they win. The same $100 bet at +120 produces only $120. The prediction is identical, but the two wagers are not.
Odds are also not simply a sportsbook's prediction of what will happen. The number you see reflects an estimate of probability, the sportsbook's margin, information available to the market and, in many cases, how that market has developed since betting opened.
Once you start thinking of odds as a price rather than just a prediction, sportsbook markets become much easier to understand.
Types of Sportsbook Odds
American, decimal, fractional odds and implied probability are all different ways of expressing the same price. Changing the format does not change the bet or how much it is worth.
A price of +150, for example, can also be written as 2.50 decimal odds, 3/2 fractional odds, or 40% implied probability.
| Format | Same Price | What It Tells You |
|---|---|---|
| American | +150 | A $100 stake produces $150 profit |
| Decimal | 2.50 | Every $1 staked returns $2.50 in total |
| Fractional | 3/2 | Every $2 staked produces $3 profit |
| Implied probability | 40% | The price corresponds to a 40% break-even probability |
American odds are the standard format at U.S. sportsbooks. Positive odds show how much profit a $100 bet would make, while negative odds show how much needs to be risked to make $100.
For example:
- +200: Risk $100 to make $200 profit
- -200: Risk $200 to make $100 profit
Decimal odds are common internationally and are particularly easy for calculating returns.
Multiply your stake by the decimal price to find your total return.
For example:
- A $20 wager at 2.50 returns $50 - including the original $20 stake.
Fractional odds are traditionally associated with the UK and horse racing. Odds of 3/2 mean $3 of profit for every $2 risked.
Probability percentages express the same price in perhaps the most intuitive way: as the break-even probability implied by the odds.
While they historically have not been a traditional odds format, percentage-based pricing has become more familiar as prediction markets have grown in popularity.
The sportsbook's displayed probability should not be interpreted as an objective statement that an outcome has exactly a 40% chance of happening.
Sportsbook prices contain a margin, so the implied probabilities across every outcome in a market will normally add up to more than 100%.
How Do Sportsbooks Set Their Odds?
Sportsbooks begin by estimating the probability of each possible outcome and translating those probabilities into prices.
For a major NFL game, that process can incorporate far more than the teams' win-loss records. Pricing models and trading teams can consider factors such as:
- Team and player ratings
- Injuries and expected lineups
- Home-field advantage
- Rest and travel
- Matchup characteristics
- Weather
- Historical and current performance
- Prices available elsewhere in the betting market
Sportsbooks do not all build every price independently. Operators use outside trading and data providers, follow prices established by major market-making sportsbooks, and combine external market information with their own models and traders.
The sportsbook then builds its margin into the prices it offers customers.
Why Do Sportsbook Odds Change?
Sportsbook prices are not fixed permanently when a market opens. Odds change when the information and market behind them changes.
Suppose the Kansas City Chiefs open as 3-point favorites on Monday. If their starting quarterback is ruled out later in the week, the original -3 line would no longer reflect the same matchup. The sportsbook can move the spread, change the attached odds, or both.
Prices can also move without a major public news event. Sportsbooks react to betting activity, particularly wagers they believe contain useful information, as well as movements at other sportsbooks and changes in their own exposure.
One common misconception is that sportsbooks simply move odds until exactly half the money is bet on each side. Modern sportsbook trading is more sophisticated than that. Operators manage risk, but they are also trying to keep their prices competitive and respond quickly when the betting market suggests their previous number may be wrong.
Odds can therefore move in two basic ways:
- The line changes: Eagles -3 becomes Eagles -3.5.
- The price changes: Eagles -3 (-110) becomes Eagles -3 (-125).
Both make the wager more expensive for someone backing Philadelphia.
If you already placed the Eagles at -3, however, a later move to -3.5 does not normally change the terms of your accepted ticket. You received the line and odds that were confirmed when the wager was placed.
How Do Sportsbooks Make Money?
Sportsbooks build a margin into their odds, commonly called the vig, juice or overround.
A simple two-sided market shows how it works.
Imagine an NFL point spread priced:
Eagles -3.5 (-110)
Cowboys +3.5 (-110)
Odds of -110 correspond to an implied probability of approximately 52.38%.
If there are only two possible sides, their true probabilities must ultimately add up to 100%. But the sportsbook's prices imply:
52.38% + 52.38% = 104.76%
That extra 4.76 percentage points is the market's overround, created by the sportsbook's pricing margin.
You can also see the effect in dollars. If one bettor stakes $110 on the Eagles and another stakes $110 on the Cowboys, the sportsbook has collected $220.
One side wins. The sportsbook returns $110 of that bettor's stake plus $100 profit, or $210 in total.
The remaining $10 stays with the sportsbook.
That does not mean a sportsbook automatically earns the same percentage on every market. Real betting is rarely perfectly balanced, odds differ across bet types, and results can produce individual games or periods where the sportsbook loses money. Actual sportsbook hold therefore varies considerably from the theoretical margin built into the original prices.
The broader advantage remains the same: sportsbooks price markets so that the payouts offered are slightly lower than mathematically fair odds would provide. Across large volumes of wagers, that built-in margin forms the foundation of the sportsbook business model.
Can a Sportsbook Lose Money?
Yes. Sportsbooks regularly lose money on individual games, markets and even entire days. They do not perfectly balance every market so that equal money sits on both sides, and they may carry substantial liability when bettors concentrate on the same outcome.
A sportsbook can also get the price wrong. If sharp bettors repeatedly take a number before the market moves, the operator may end up holding wagers at odds that were too favorable to the bettor. Popular parlays, correlated results and unusually one-sided betting can create large payout exposure as well.
The sportsbook's advantage comes from pricing markets with a margin and managing risk across thousands of bets over time. That gives the operator a structural edge, but it does not guarantee a profit on every event or accounting period.
Are Online Sportsbooks Legal in the United States?
There is no single law that makes online sports betting available everywhere in the country.
After the U.S. Supreme Court invalidated the federal PASPA restriction in 2018, states were able to determine whether and how to authorize sports wagering. State rules can differ on online availability, permitted markets, minimum age and other restrictions.
In practice, betting apps use geolocation to confirm that you are physically inside an eligible jurisdiction when you place a wager.
As of today, sports betting is legal in some form in 39 states and Washington, D.C. A legal market does not always mean a statewide mobile app is available. Some states limit betting to retail locations or tribal casinos.
| Availability | States |
|---|---|
| Statewide online sportsbooks | Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, West Virginia, Wyoming and Washington, D.C. |
| Licensed but limited | Mississippi, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Washington and Wisconsin. |
| No licensed sportsbook market | Alabama, Alaska, California, Georgia, Hawaii, Idaho, Minnesota, Oklahoma, South Carolina, Texas and Utah. |
Why Sportsbooks Verify Your Age, Identity and Location
Opening a regulated sportsbook account typically involves more than entering an email address and making a deposit.
Jurisdictions can require operators to verify identifying information such as legal name, date of birth, residential address and other identifying information, in order to confirm that the bettor meets applicable eligibility requirements.
Location is a separate issue.
You may already have a valid sportsbook account but still be unable to wager if you are physically outside the area where that sportsbook is authorized to accept bets.
Regulated mobile wagering systems use geolocation technology when a bettor attempts to wager.
This creates an important distinction for travelers:
Having access to your account does not necessarily mean you are allowed to place a bet from your current location.
Deposits, withdrawals, account viewing and wagering can also be treated differently under operator and jurisdictional rules.
How to Start Using an Online Sportsbook
These steps are a basic first-use checklist. Specific verification, payment and market rules depend on your state and the licensed sportsbook you choose.
Be physically located in a state where the operator is licensed, meet that state's minimum age, and use your real information. Sportsbooks check location when you place a wager.
Choose an operator authorized in your state. Registration usually requires your name, address, date of birth and identity verification. Do not rush through the terms or house rules.
Set deposit or spending limits before funding the account. Use a payment method you recognize, review any fees or promotional conditions, and treat the deposit as money you can afford to lose.
Choose a market you understand, then check the selection, line, odds, stake and potential return. A submitted wager is generally final unless the sportsbook voids it under its rules.
Check how the book grades the market and when the result settles. Keep a simple record of your deposits, bets and withdrawals. That is useful for both budget control and taxes.
Sportsbooks vs. Prediction Markets, DFS and Social Sportsbooks
Sportsbooks, prediction markets, DFS and social sportsbooks can all involve sports, but they are different products with different rules, pricing and legal availability.
| Format | How it works | Typical oversight |
|---|---|---|
| Licensed sportsbook | You bet against the operator at posted odds on sports outcomes. | State gaming regulators |
| Prediction market | You trade event contracts whose prices move with supply and demand. | Federal or platform-specific framework |
| DFS | You build a lineup and compete under a scoring system. | State-by-state rules |
| Social sportsbook | You use virtual currency or promotional sweepstakes mechanics rather than a traditional cash sportsbook model. | Different state consumer and gaming rules |
The right question is not which format sounds most familiar. It is which one is legal where you are, which rules you understand, and whether you are comfortable with the risk.
Responsible Sports Betting
Sports betting should fit inside a budget and a time limit you decided before the bet. It should never be a plan to cover bills, recover losses or solve a financial problem.
- Decide your maximum spend before you deposit.
- Use deposit, spend, time-out or self-exclusion tools when you need them.
- Do not chase losses with bigger or faster bets.
- Keep a record of deposits, withdrawals and results.
- Take a break when betting stops being entertaining.
If gambling is causing harm for you or someone else, call or text 1-800-MY-RESET for confidential help in the United States.
Sportsbook FAQs for Beginners
A sportsbook is a business that accepts wagers on sporting events and pays winning bets. Online sportsbooks do this through websites and apps.
It posts markets and odds, verifies that you are eligible and located where betting is allowed, accepts a wager, then grades it under its rules after the event.
Sportsbooks are legal only where a state or jurisdiction authorizes them. Availability, age rules and operators vary by location.
Licensed sportsbooks are supervised by state gaming regulators, lotteries or similar authorities. The relevant regulator depends on the state.
Common markets include moneylines, point spreads, totals, props, futures, parlays and live bets. The exact menu depends on the sport, state and operator.
The minimum age is set by the jurisdiction. It is commonly 21, but users should check the law and operator rules in the state where they are betting.
Yes. The IRS says gambling winnings, including sports betting winnings, are taxable and must be reported. Keep accurate records of your activity.
Yes. Licensed operators typically require identity verification and use geolocation when a wager is placed.
Usually only if you are physically inside another location where that operator is licensed and available. Your home address alone does not control access.
Check the operator website for its state license and confirm it with the state gaming regulator. Do this before you deposit.
Cash out is an optional offer to end a wager early for the amount shown. The offer can change or disappear and accepting it ends the original bet.
Sportsbooks set and adjust odds using models, market information and their own risk management. Prices can change before and during an event.
At -110, you generally risk $110 to win $100 in profit. A $110 winning bet returns $210 total, including your stake.
A push normally returns the stake. Postponed, canceled and shortened games are settled under the sportsbook's house rules, which vary by market.
Yes. Licensed operators commonly offer mobile apps or mobile websites, but you must still meet the age, identity and location requirements.
Offshore sites are not regulated like state-licensed U.S. sportsbooks. They may lack the same consumer protections, dispute routes and accountable oversight.
