Is Legalized Sports Betting the Next Investment Trend
Sports betting appeals to the smart bettor because it does not have a fixed house edge for the casinos. Sports betting requires more skill than luck and is similar to live poker. You do not win every time but the skilled handicapper has a huge advantage over the recreational bettor. How sports betting can be a profitable investment involves an understanding of numbers, odds, sports and betting trends.
The casino sports books make their money on sports bets by collecting a commission on losing bets. This is called vigorish or vig for short. The most common odds are 11 to 10. This means if you want to win $100 you are risking $110. With NFL betting on an NFL team, the sports book pays $210 to a winner and keeps the $110 from losing bets. NBA betting is the same.
Ideally, the sports book would like to have the same amount of money wagered on the two teams playing. If the Giants are playing the Colts and they have one player betting on the Giants and one player betting on the Colts they would pay the winner $100 but collect $110 for the loser. This gives them a $10 profit. To accomplish this they assign a line or spread to make the contest equally attractive for both sides. How the NCAA, the NFL and the NBA use the following betting tools to create a market is the sports betting platform.
The Point Spread
Many people believe that the point spread is the predicted margin of victory one team will beat another team. This is not true but a spread number is needed to create wagering on both sides. The line is the handicapper’s prediction of what number will be required to split the wagering evenly on both teams. The line may change a little before game time. The sports books goal is to have the betting as evenly as possible.
If the public is swayed by sentiment on their NFL or NBA picks, the odds makers need to adjust the line to get some action on the other team. Otherwise, the betting would be heavily lopsided. The general betting public reacts from the opinions of others. Smart bettors usually go against public sentiment when bettors over-value a certain team.
The sports books line is flawed if it does not attract the same action amount on both sides. From a smart handicapper’s point of view, the line is flawed when it does not compute to his predicted outcome of the game. A weaker team can actually become the favorite if public sentiment is with that team. When this happens the underdog presents a huge overlay for the seasoned handicapper tilting the odds in his favor. This is the contrarian principle and why many smart handicappers go against the general betting public.
A winning handicapper formulates his own opinions about the game and ignores most of the public sentiment.
A handicapper gets information from numerous sources and assigns weights and values to the wagering data. They will make their own power ranking and predict what the point spread should be without looking at the official line. They compare their predictions to the line to look for discrepancies. A large amount of data is available via the internet and other sources that the handicapper will read through to find the gems. The use of computer programs can help when searching through the data.
Why don’t more people win at sports betting. Like any other endeavor, it takes time, patience and practice to become successful. A person of average intelligence can become a winning handicapper if they have the desire. Based on the odds of -110 for a straight football or basketball bet a handicapper only need to be right 52.38 percent of the time to break even. However, many sports bettors cannot achieve that percentage of winning over the long run.
The chart below shows the break-even points for the various odds you will encounter when you make a money line bet. With higher odds, you have to have a higher winning percentage to break even. If you bet the underdogs you can have a lower win percentage and still make money.
Favorite Winning % Underdog Winning %
-110 52.38 +110 47.62
-115 53.49 +115 46.51
-120 54.55 +120 45.45
-125 55.56 +125 44.44
-130 56.52 +130 43.48
-135 57.45 +135 42.55
-140 58.33 +140 41.67
-145 59.18 +145 40.82
-150 60.00 +150 40.00
Betting favorites vs underdog
Potential to make money
The best part about sports betting is that you always have the potential to make some money. Regardless of the size of your bet, you always have the ability to win, which not only feels great but puts a little extra padding into your wallet. This money making does not have to stop with just making a few extra bucks here and there. A lot of people have trained themselves to become professional sports bettors. They have learned how to sift through stats with a keen eye for making correct picks. If you are good at predicting how games are decided, sports betting may be for you. Now that it is legal, a new investment trend will emerge from the shadows of the old sports betting under-ground economy.
Lack of knowledge
Most sports bettors know just enough to make them dangerous. There is a great difference between being knowledgeable in the NFL and NFL betting. Being able to name the starting offensive line for the Cowboys is not likely to help a person win a bet. What many sports bettors do not realize is they are competing against other bettors who spend countless hours on handicapping, studying trends, injuries, and betting angles. If you fail to study the games, find somebody who does it for a living. A reputable sports service is skilled with sports betting professionals but many are dubious without credentials in this new investment market. Anybody can throw their NFL picks, NBA betting trends or NCAA college lock of the week game but finding value is a key betting tool. The professional looks at numbers and not necessarily the teams.
The sports betting industry is a major investment market for a limited number of successful traders. Alternative investment markets are a popular destination for investors with excess cash waiting for a decent return on investment. Most stocks are tied into the economic news with no parameters and direction. It is becoming more difficult for even savvy investors to time the bottom. They have to become much more selective. The sports betting market has been around a long time with some controversy in the earlier years. However, there is a vibrant market in today’s highly competitive sports arena. The regulated Nevada sports books had a monopoly on legalized sports betting until the recent court decision to overturn the ban on sports betting for states to move forward.
Can the amateur recreational bettors make money at these books — sometimes, but not in the long run.
The professionals know how to look for the edge and only need to hit a minimum of 54% to make a modest return on investment. Making a 15% to 25% return for the year is very possible. The good ones are few but the results are quick and opportunities exist everyday when soft betting lines are found and exploited. The betting lines are made to divide the betting public. They ideally want even betting on both sides. Their number does come close about 70% of the time.
This happens a lot in all sports. They do provide a good service but their stats and computer models can only go so far. Investments in this area have a limited scale and cannot handle the millions or billions that pour into those other markets. But investors with up to one million can see a very nice return with the right professional.
Sports betting alternative investment
The Nevada Senate Bill 443 passed in 2015 has made it legal for individual investors to deposit money in a sports betting mutual fund investment entity group for the purpose of betting on sporting events. What are the requirements of sports betting mutual funds and what legal business is needed This sports betting mutual fund entity group is usually a Nevada corporation or LLC formed by gaming executives and sports bettors that manage the fund as a Nevada fiduciary agent. They can solicit funds from investors anywhere in the world. However, major restrictions do apply and is open to anyone that can go through the difficult approval process.
The application process is far from just providing standard information. Many applications have been rejected with about 10% being approved. The application process is an attempt to secure very personal and private information about the applicant and any investor willing to endure such scrutiny and invasion of privacy. This would include a background check, source of funds invested and other customer data which is given to a sports book willing to accept the entity betting. In other words, a lot of red tape. If any prospective investors are not dismayed by the application process, there are other alarming issues to confront.
CG Technologies is the only option for entity group formation and execution. They are the center of the application process to get things moving through the state and for their managed sports books to accept and review investment groups detailed information. Other sports books could eventually join in the experiment but most are weary of the red tape and short-sighted regulations that make things difficult.