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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 into a more business-like and professional endeavor, there is a higher likelihood that we will 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 usually described as being an investment with a marketplace – that 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 claim 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 (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.” Just like more traditional assets for example stocks and bonds are according to price, dividend yield, and interest rates – the sports marketplace “price” is determined by 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 far more business-like endeavor, and also 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 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 referred to 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 may 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 make the most of 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 use a contrarian approach and bet against the public to capture value. This is one rationale 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, http://www.egresadosudistrital.edu.co official website and the “volume” of betting activity can give us an concept of what various participants are doing. Our research shows that the public, or “small bettors” – typically underperform in the sports betting industry. This, subsequently, allows us to systematically capture value by using sports investing methods. Our goal is to apply a systematic and academic approach to the sports betting industry.
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