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Lots of people enjoy sports, and sports fans often enjoy placing wagers on the outcomes of professional 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 into a more business-like and professional endeavor, there’s a higher likelihood that we might make the case for sports betting as an investment.

The Sports Marketplace as an Asset Class

How can we make the jump from gambling to investing? Dealing 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 usually 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?

For instance, investors earn interest on bonds in exchange for lending money. Stockholders earn long-term returns by owning a portion of a company. Some economists claim that “sports investors” have a peek at this web-site a built-in inherent return in the type 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 will take this investing analogy a step further by studying the sports betting “marketplace.” Much like more traditional assets for example stocks and bonds are based upon price, dividend yield, and interest – the sports marketplace “price” is based upon point spreads or money line odds. These lines and odds change over time, the same as 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. Specifically, 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. Within 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 much like institutional investors.

Within the investing world, the public is described as 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 make use of a business-like approach to benefit from 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 online 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 studies show that the general public, or “small bettors” – typically underperform within the sports betting industry. This, consequently, 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.

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