Sports Gambling Hedge Fund

Mon, May 4, 2015

 In 2004, billionaire Mark Cuban wrote on his blog, his vision to create a sports gambling hedge fund. Cuban makes some great points here paralleling the similarities between gambling markets and financial markets. He gives us three very important points to consider.

The first major point that Cuban makes is that gambling markets attracts a greater amount emotional money than do financial markets. Why is this so important? Well, we know that emotional money tends to make more bad “rash” decisions. So consequently, the more emotional money in the market, the better value it creates.

Another great point that Cuban emphasizes is the amount of data that’s available in sports betting vs the amount of “true” data in the financial markets. Financial data tends to be more skewed and long-term. While sports betting data is more readily available, relevant and current. This means that if you know which data is significant you clearly have an advantage in the sports betting market.

The third and most important argument Mr. Cuban makes is the efficiency of the sports betting market. Cuban writes “how efficient can a market be where the majority of investors expect to lose money.” If this statement doesn’t scream “there’s money to be made here” then nothing will get your attention. Investing with others who are expecting to lose money is definitely a market worth exploring.

So as you can see by billionaire Mark Cuban piece, there are huge opportunities to make legitimate returns in the sports betting market. As stated, he highlights the fact that the biggest and brightest clearly have an edge. Now it just becomes a matter of which data is relevant to winning you money and how you go about leveraging that information.