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Many people enjoy sports, and sports fans often enjoy placing wagers on the outcomes of sports. 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 could 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?
For 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 form of “risk transfer.” That is, sports investors can earn returns by helping provide liquidity and transferring risk amongst other sports marketplace participants (for example the betting public and sportsbooks).
Sports Investing Indicators
We may take this investing analogy a step further by studying the sports betting “marketplace.” Much like more traditional assets such as stocks and bonds are according to price, dividend yield, and rates of interest – the sports marketplace “price” is according to 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 far more business-like endeavor, and to study the sports marketplace further, we collect several additional indicators. Most importantly, we collect public “betting percentages” to study “money flows” and sports marketplace activity. Furthermore, 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” and 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 additionally sometimes act in manner similar to institutional investors.
Within the investing world, the public is called the “small investor.” Similarly, the 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 employ a business-like approach to make the most of 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 work with a contrarian approach and bet against the public to capture value. This really is one reason why we collect and study “betting percentages” from several major learn online gambling 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 perception of what various participants are doing. Our research indicates that the general public, or “small bettors” – typically underperform within the sports betting industry. This, subsequently, permits 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.