Sports Betting as an Investment

Sports betting is traditionally seen as a gamble, and most people who bet on sports are certainly gambling. Our approach here at ScoreMetrics is different – we look at sports betting as an investment.

Let’s define the terms. Investing is the act of allocating capital to assets with the goal and expectation of generating a profit. Good investing involves research, risk analysis, managing capital responsibly, and diversifying investments. Successful investors follow a long-term strategy or a system that matches their goals and tolerance for risk, and they follow that system non-emotionally.

Gambling, on the other hand, is staking money in uncertain outcomes that involve a high amount of chance. In other words, gamblers mostly rely on luck instead of research. Most people gamble for fun here and there.

Investing is often associated with the stock market or with real estate. Gambling comes to mind when we think of casinos, poker games with friends, and betting on sports.

But it’s certainly possible to gamble in the stock market. Making uninformed trades in hope of turning a quick profit is not investing – it’s gambling. And as you probably guessed by now, it’s also possible to invest in sports betting. Having a proven system in place and acting strategically and non-emotionally is investing, not gambling.

In this report, the ScoreMetrics Lab gives you an overview of sports betting as an investment and draws comparisons to the stock market.

Familiar similarities and beautiful differences

When you look at them at their most fundamental, base level, sports betting and the stock market reward players for successfully predicting the future. Much like the stock market, successful sports betting isn’t all about wins and losses (ie. stock prices going up and down). It’s about following a system that generates profit over an extended period of time.

It’s not considered a win if you bought stock in Amazon last week and the stock price is up 5% today. You’re not cashing in and telling all your friends that you’re a winning investor. Just like you won’t call yourself a loser if the stock went down 5% the next week.

Instead, you’re following a strategy. Maybe you believe that Amazon will beat the S&P 500 returns over the next 5 years and that’s the minimum amount of time you’re going to hold on to the stock. You probably have a bunch of other stocks in your portfolio as well that share a similar investment hypothesis.

In similar fashion, following a sports trading system is not about the individual wins or losses of a single trade. You’re executing a number of trades based on your investment hypothesis, and you’re measuring success over a long period of time – for a full season, for example.

Successful long-term investing in sports requires diversified systems, an intricate unit allocation model, careful bankroll management, keeping detailed records, a cool head, and constant data-driven assessment of your performance.

Sound like a lot of work? Sure, this is not an easy way to get rich quick. No such thing exists. Just like in the stock market or at a casino, you can go all-in on a one-in-a-million gamble and dream that you’ll hit it. Most likely you won’t.

But here’s the beautiful thing if you decide to put in the work: Investing in the sports betting market has zero correlation to other typical investment opportunities that are out there. The stock or the housing market might crash due to some crisis, and single stocks might be heavily affected by all sorts of events. But these have no effect on sports wagering.

The sports investment market gives us an opportunity to diversify our investments. The returns also have great potential to beat other markets, and the volatility can be kept low with carefully designed sports investment systems. It’s a liquid market where most people act based on intuition, and this gives smart investors a lot of opportunities for finding an edge.

Finding opportunities

Sports books have a lot of similarities to the stock market. They are marketplaces where investors have the opportunity to invest capital in future results. And just like in the stock market, there are loads of those opportunities available and most of them aren’t that great. Investors need to be smart about choosing their spots.

In essence, bookmakers act as marketplaces that take bets on both sides of contests and make their money by taking a “vig” off of each trade. They use various models to calculate probabilities for each result and adjust their odds accordingly.

This is pretty similar to futures or options in the stock market, which investors often use to speculate whether a stock price will go up or down over a certain period of time. The marketplace offers investors the chance to “bet” on both sides and takes their cut in form of a fee for each trade.

So where are the good opportunities in the sports betting market?

At ScoreMetrics, we find these by exploring hundreds of hypotheses and conducting thorough research to find out if we have something in our hands that meets our rigorous criteria. We create rules, analyze every piece of relevant data we can find, and backtest our theories to make sure that they’re profitable over long periods of time.

To quote our very own John Todora from his new book, “Zero Correlation Investing – The Score Metrics Secret”:

”In short, ScoreMetrics is a method of speculating on sports in the same way you speculate on stocks, but, just like with other investments, the method uses back-tested analytics to find patterns that show a significant return on investment (ROI), while limiting risk.”

The book is on sale for a limited time, so now’s a great opportunity to dig deeper and learn all you need to know about sports betting as an investment.

Also make sure to keep coming back to for regular quality analysis on current sports investment topics – we’re here for you!

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