Sonia Chifley asked 5 months ago
A lot of men and women 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 in to a more business-like and professional endeavor, there is a higher likelihood that we might make the case for sports betting as an investment.
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 as 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?
As an example, investors earn interest on bonds in exchange for lending money. Stockholders earn long-term returns by owning a portion of a company. Some economists state that “sports investors” have a built-in inherent return within the form of “risk transfer.” That 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 may 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 determined by price, dividend yield, and rates of interest – 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 gambling a more business-like endeavor, and to study the sports marketplace further, we collect several additional indicators. Especially, we collect public “betting percentages” to study “money flows” and sports marketplace activity. Aside from that, just as the financial headlines shout, “Stocks rally on heavy volume,” we also track the amount of betting activity in the sports gambling market.
Sports Marketplace Participants
Earlier, we discussed “risk transfer” and also the sports marketplace participants. Within 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.
In the investing world, the general public is called the “small investor.” Similarly, the general public often makes small bets in 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 use a business-like approach to cash in on sports betting. In effect, they take on a risk transfer role and also 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 employ a contrarian approach and bet against the public to capture value. This is one reason why we collect and study “betting percentages” from several major great online football gambling agent (try Nap) sports books. Studying this data allows us to feel the pulse of the market action – and carve out the performance of the “general public.”
This, combined with point spread movement, as well as the “volume” of betting activity can give us an concept of what various participants are doing. Our research indicates that the public, or “small bettors” – typically underperform in the sports betting industry. This, sequentially, 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.
