Many individuals enjoy sports, and sports fans often enjoy placing wagers on the outcomes of sports events. Most casual sports bettors lose money over-time, creating a bad name for the sports betting industry. But what if we could “even the playing field?”

If we transform sports betting into a more business-like and professional endeavor, there is a higher likelihood that we might make the situation for sports betting being an investment.

The Sports Marketplace as an Asset Class

How can we make the jump from gambling to investing? Working with a team of analysts, economists, and Wall Street professionals – we often toss the phrase “sports investing” around. But what makes something an “asset class?”

An asset class is often described being an investment with a marketplace – which has an inherent return. The sports betting world clearly has a marketplace – but what about a source of returns?

By way of example, investors earn interest on bonds in exchange for lending money. Stockholders earn long-term returns by owning a portion of a business. Some economists state that “sports investors” have a built-in inherent return within the type of “risk transfer.” Which is, sports investors can earn returns by helping provide liquidity and transferring risk amongst other sports marketplace participants (such as the betting public and sportsbooks).

Sports Investing Indicators

We will take this investing analogy a step further by studying the sports betting “marketplace.” The same as more traditional assets for example stocks and bonds are based on price, dividend yield, and interest rates – the sports marketplace “price” is based on point spreads or money line odds. These lines and odds change over time, much like stock prices rise and fall.

To further our goal of making sports learn gambling a far more business-like endeavor, and also to study the sports marketplace further, we collect several additional indicators. Primarily, we collect public “betting percentages” to study “money flows” and sports marketplace activity. On top of that, just as the financial headlines shout, “Stocks rally on heavy volume,” we also track the amount of betting activity within the sports gambling market.

Sports Marketplace Participants

Earlier, we discussed “risk transfer” as well as the sports marketplace participants. In the sports betting world, the sportsbooks serve a similar purpose as the investing world’s brokers and market-makers. They also sometimes act in manner similar to institutional investors.

Within the investing world, the public is described as the “small investor.” Similarly, the general public often makes small bets within the sports marketplace. The small bettor often bets with their heart, roots for their favorite teams, and has certain tendencies that can be exploited by other market participants.

“Sports investors” are participants who take on a similar role as a market-maker or institutional investor. Sports investors make use of a business-like approach to profit from sports betting. In effect, they take on a risk transfer role and are able to capture the inherent returns of the sports betting industry.

Contrarian Methods

How can we capture the inherent returns of the sports market? One method is to make use of a contrarian approach and bet against the public to capture value. This really is one explanation why we collect and study “betting percentages” from several major online sports books. Studying this data permits us to feel the pulse of the market action – and carve out the performance of the “general public.”

This, combined with point spread movement, and the “volume” of betting activity can give us an perception of what various participants are doing. Our research shows that the general public, or “small bettors” – typically underperform within the sports betting industry. This, consequently, allows us to systematically capture value by utilizing sports investing methods. Our goal is to apply a systematic and academic approach to the sports betting industry.