Looking at Sports Betting as an Investment

The majority of the general public feels that sports’ betting is NOT about an investment, but finding a sure thing which is commonly referred to as a “lock”. In my opinion, this is false. In reality sports wagering can be just as volatile as stocks, real estate, currency or any other speculative market. Quite frankly, our service or any good handicapper can yield a much higher return than the stock market.

In my opinion, the majority of the general public are NOT educated on gambling. Thus, the majority of sports bettors are losers. In fact, sports bettors actually win an average of 48% of their bets and compound that with the juice. Most sports books charge an average juice or “vig” of your winnings of 10%, meaning you have to risk $100 to win $90. This means a sports bettor must win 52.4% (46% in baseball) of his games just to break even, wagering $100 per game. Of course, as in any game of chance, there is variability in the actual results and just because you have won 56% in the past and expect to win 56% in the future, does NOT mean that you are going to win 56% sports season. Of course, there is variance in sports betting as there is in most investments.

Money Management

Solid, strategic, well disciplined money management can be as beneficial as picking winners. Most sports bettors that I know, do NOT use money management. Most sports investors feel that no more than 2% of your bankroll should be invested on a sports pick for a consistent long term goal.

What About A Point Spread

Point spreads were originally developed to keep sports bettors interest between two teams with different talent levels. For example, if you have Ohio playing UNLV in college football recently. It was quite evident that the sports books favored Ohio since UNLV was +40. This means that Ohio was favored by 40 points which means they had to win by 40 points to cover the spread. In my opinion, that would NOT be easy! Point spreads are designed so that the probability of each outcome is roughly equal, and are generally set so as to approximate the median score differential between the two teams.

While the odds makers do to try approximate the median margin of victory between two teams, they also try to reduce their exposure to risk by setting lines such that the public money will fall evenly on both sides of a game, so that they can offset the bets against each other and earn a profit on the juice without exposing themselves to large potential losses. This means that oddsmakers for sports books are often reading the public perception rather than team performance which means that the general public sets the line.

In conclusion with the right advice from a handicapper, they can provide information that will help you set positive expectations in uncertain markets. Thus, correct financial optimization and bankroll management, long term risks are nominal compared to the risks of investing in other, more conventional markets. Just as a stock can fluctuate daily, a single team can win or lose on any given day. As long as an investor maintains a long-term perspective and does NOT over extend themselves by betting more than they can handle or playing catch up, the return should be attractive.

Translate »
Skip to toolbar