Why Do Sportsbooks Make Early Payouts on Bets Sometimes?

Man Handing Out Money With a Sportsbook Background

The typical process for how sportsbooks pay winning bets is as follows:

  1. The bookmaker offers multiple outcomes on a single sporting event.
  2. Each gambler wagers on an outcome.
  3. The match takes place and decides the outcome.
  4. The sportsbook pays the winning side.

In almost no situation does a bookmaker pay bettors before a contest is over. After all, miracles can happen and a team/player that’s losing badly can come back.

Interestingly enough, though, sportsbooks do occasionally make early payouts. I’ll explain why they do this along with how it has backfired on them in certain cases.

What Constitutes an Early Payout by Bookmakers?

An early payout simply refers to when a sportsbook pays the winning side before the outcome is decided. They don’t just offer a partial pay out either—they pay the full amount.

Here’s an example:

  • You bet on the Chicago Bulls at +145.
  • You place a $100 wager and stand to win $145.
  • Chicago gets extremely hot and is winning by 25 points in the fourth quarter.
  • The bookmaker decides to prematurely pay you $145 before the final buzzer sounds.

Chicago’s opponent has almost no chance of coming back from a 25-point deficit at any point in the fourth quarter. Nevertheless, the game isn’t over and a miraculous comeback could potentially happen.

The bookmaker doesn’t care in this example, though. They’re willing to pay you regardless due to the Bulls’ impending victory.

Early Payout vs Cashout Option

An early payout could be potentially be confused with the Cash Out feature that some online sportsbooks offer. Cash Out refers to when bookmakers provide an option to take profits before a wager is decided.

Here’s an example:

  • You bet on the Tampa Bay Buccaneers at -115.
  • You place a $115 bet and stand to win $100
  • Tampa Bay is winning by two touchdowns in the third quarter.
  • A Cash Out option for a guaranteed $90 win is now available.
  • You accept this guaranteed $90 payout; a bettor on the losing side must accept your proposal.

The key difference here is that the sportsbook isn’t offering you the payout on your bet. Instead, they’re merely providing option to take less money in return for a guaranteed win.

Additionally, a gambler on the other side must accept your proposal. You can’t just automatically use Cash Out whenever you feel like it.

With an early payout, you don’t need to worry about anything other than collecting your winnings. The bookmaker has already decided to make a full payment.

Examples of Early Payouts That Backfired

A sportsbook assumes an obvious risk when paying gamblers before a contest is decided. They could make the payout and suddenly lose big on both sides if the other team/player comes back.

This very scenario has actually happened in the past. Here are a couple of high-profile incidents where bookies got burned.

Paddy Power Pays Hillary Clinton Bettors Before Trump Wins

Hillary Clinton was a big favorite to win the 2016 Presidential Election. She led Donald Trump in the polls by a wide margin throughout much of the year.

She was also favored in the betting odds, which are often more reliable than the polls. With just one month until the election was decided, Clinton seemed a shoo-in to become the next US president over rival Donald Trump.

Irish bookmaker Paddy Power apparently saw the writing on the wall. In October 2016—a full month ahead of the actual voting day—Paddy Power paid a cumulative $1.1 million to those who wagered on Clinton. The bookmaker noted at the time:

“The recent flood of revelations have halted his [Trump] momentum and his chances now look as patchy as his tan”

Paddy Power had Clinton pegged at an 85.7% chance of winning at the time. Meanwhile, Trump faced a dismal 18.2% chance of becoming president (percentages exceeded 100% due to bookmaker’s juice).

Exterior of the White House

One bettor really made out on the early gift from Paddy Power after risking £50,000 ($61,485) on Clinton. Over 6,000 other gamblers from the UK and Ireland received payouts too. Spokesman Lewis Davey said:

“If Trump wins we’ll be facing a double payout and left with some seriously expensive egg on our faces”

The scenario that Davey alluded to did indeed happen. Trump mounted a comeback with just days left in the election and earned a surprise victory. Paddy Power, which already paid $1.1 million to Clinton bettors, had to cover the Trump side as well.

FanDuel Pays Alabama Bettors Too Early

The Alabama Crimson Tide were undoubtedly the college football team of the 2010s. They won four titles last decade and routinely competed for the national title.

Their dominance was on full display prior to the 2019 NCAA Football National Championship. Facing the Clemson Tigers, they were a favorite to win their fifth title within the decade and an 18th overall.

Those who placed futures bets on Alabama winning the championship prior to the season looked good at this point. FanDuel agreed and paid a collective $400,000 to those who wagered on the Crimson Tide before the game was even played. In fact, they didn’t even wait until Alabama won their first College Football Playoff (CFP) game before delivering the early payout. A spokesperson noted:

“It has been a dominant season for the Crimson Tide and our traders have seen enough. It’s a way to reward our customers for betting on Alabama when the odds were really hard to make any money doing it”

The Tide won their first CFP game to make it to the championship. However, they got crushed by Clemson to the tune of 44-16.

FanDuel, which was acquired by Paddy Power Betfair in 2018, was forced to make double payouts. They covered winnings for Clemson bettors following the upset. The company stated afterward:

“We made history in November when we paid out customers early on Alabama winning the National Championship. Congratulations to Clemson and to our customers who got paid out early. You’re the real winners today”

What’s the Advantage of Early Payouts?

Sportsbooks stand to lose serious money when they pay too early. You can see that Paddy Power and FanDuel both lost big money when they paid ahead of schedule.

Therefore, you might think any bookmaker that offers early payouts is crazy. The reality though, is that they do stand to benefit in one major way: publicity.

FanDuel and Paddy Power didn’t make these payouts because they were resigned to defeat. Instead, they announced the early payouts and gained press in the process.

Yes, sportsbooks are taking a risk when they give gamblers winnings ahead of time. But the free press is sometimes worth the risk.

Furthermore, they don’t always lose when making these decisions. Bookmakers only deliver early winnings when they’re fairly certain on the bets.

Women's World Cup 2019 USA Winning Team

Not all early payouts backfire. For example, FanDuel paid $400,000 to those who wagered on the USA women winning the 2019 World Cup. As expected, the American women prevailed and won the title game against the Netherlands 2-0.

The blunders that I’ve discussed only represent a small portion of early payouts. Bookmakers sometimes offer early winnings before the conclusion of a high-profile event so that they can generate publicity.

Can You Spot Early Payout Opportunities Ahead of Time?

You’ll definitely benefit by spotting an early payout opportunity before the fact. After all, you receive a guaranteed profit on the full value of your odds.

Such scenarios are better than Cash Outs, which only allow deliver a portion of your potential winnings. Therefore, you’d do well to spot potential scenarios where bookmakers pay prematurely.

This process isn’t exactly a common advantage gambling technique that will bring you countless profits. But it’s still worth discussing just in case you want to chase an early win.

First off, you must wager on a game/event where there’s a heavy favorite. You stand even better odds of winning early if you make a futures bet well in advance of the outcome.

Whether it’s betting on politics or choosing the eventual college football champion, bookmakers like to pay early on futures bets.

Next, you want to choose an operator that craves publicity. From everything I’ve seen, the Paddy Power/Betfair/FanDuel group is the one to choose.

Paddy Power has a long history of engaging in publicity seeking events. This tradition continues even after their merger with Betfair and acquisition of FanDuel.

Even if you follow these steps, you’re unlikely to benefit from an early payout. You should still be making good bets with the outside hope of winning early.

But as can be seen, your chances of collecting a premature profit improve when you:

  • Bet on heavy favorites in advance.
  • Choose bookmakers that are the most likely to pay out early.

Conclusion

Early payouts aren’t common in the betting industry. Almost every bookmaker waits on the results before paying the winning side.

However, some sportsbooks pay those who wager on a heavy favorite early. FanDuel and Paddy Power are notable examples of this rare occurrence.

The downside to making these premature payouts is that a bookmaker can get burned. Both Paddy Power and FanDuel had to pay big money after making the wrong choice.

Then again, each sportsbook gained major publicity for the early gifts to customers. Therefore, you can expect to see these types of payouts in the future.