People often compare professional sports bettors to day traders and the sports betting market to the financial market. I completely agree that they are similar and any type of market should be considered the same.
I don’t care what you call it, but the name should always be the same. If you want to call stocks investing, you need to call the sports betting market investing. If you want to call stocks, real estate, or crypto gambling, call the sports betting market the same thing.
Let’s dig into some of the biggest differences between these markets and the sports betting market.
1. The Market Never Closes
This is one of the biggest differences when it comes to sports betting vs. the stock market. Once the market closes on Wall Street, you’re done for the day; but the market never closes in sports handicapping.
Now, for the recreational bettor, this really isn’t a problem. One or two games a week isn’t a big enough sample size to really have to get the best of the number to make a long term difference. However, when this is your only source of income, getting the best of the number is truly the only advantage you have against the bookmaker.
If only one sports book in Las Vegas has the number you want, no matter the time, day or night, you better stop what you’re doing and get there. When that Don Best screen flashes a team’s move or an injury, you better stop what you’re doing and get it down.
I can’t tell you how many times I’ve had to leave dinner to get a number that just popped up. IHandicapping sports and “the market” take no days off.
2. Insider Trading Is Not Only Legal, But Encouraged
This is probably my favorite way that this market differs from the stock market, and it all goes back to regulation. Don’t get me wrong, the sports betting market is becoming so much more regulated with legalization. But the truth is, even more than getting the best of the number this is your number one advantage over sports books in my opinion.
Go back to the stock market comparison. If you know a fortune 500 CEO is about to be indicted and got that information from a janitor overhearing a phone call, then made a trade to short their market accordingly, you could go to jail for years.
When it comes to sports betting, if you hear about an injury from a player’s friend, there’s no penalty. You can go ahead and get down as much as you want free and clear with no restrictions.
Sure, some novelty props aren’t honored once information is made official, but when it comes to regular sports betting markets, information is king.
3. Timing Is Very Different
This is a weird one, but it needs to be mentioned. If so inclined, you can hold a stock forever. A sport bet has a finite ending. Sure, a futures bet can be held for up to a season and some outlandish ones (how many Majors will Koepka win by 2040) can be held even longer, but eventually there is a definite conclusion.
Even the worst time of the stock markets history can turn a trader a profit eventually if you hold onto it long enough. To bridge this gap a little bit though, if you bet on the Cleveland Browns every game during their 0-16 run where they covered no spreads all the way through towards last year it’s something of the same thing.
Long term trends can be played for years and years forever if you find the right ones, but markets don’t just end the way sports betting seasons do.
4. Brokers, Touts & Fees
When you decide to hire a stock broker or even open up an E-Trade account, you’re going to be charged a trading fee, cash out fee, broker fee, amongst others. This can absolutely crush your profits when you invest in a stock that goes up and multiply your losses when it’s the opposite situation.
At the highest level of mutual funds and investors, it really doesn’t matter as there’s so much money it’s meaningless. That being said, Uncle Sam is going to come for those taxes of capital gains.
Now, let’s be clear, I’m not advocating for tax fraud or evasion. I’m simply telling you that when you win a small sports wager at a sports book with no players card or on a local account, no one is coming after you for cash — until you want to buy some assets. I look at it pretty simply, -110 is your tax from a personal day trading perspective.
If you don’t know how to invest in the sports gambling market, there are people out there who help you — in theory — like a broker. Those are called sports betting “touts.” The problem, amongst others, is the type of people who have been associated with that profession. There’s no schooling, no certification, and no real way to know the legitimacy of someone, yet.
5. Direct Influence
It doesn’t matter if you’re wagering on a multimillion dollar athlete, a well-bred horse, or an 18-year -ld engineering major who may never play another basketball game in his life after March. The way a company’s performance is directly tied to its shareholders, athletes’ performance is tied to your 1.1 : 1 proposition (assuming -110) on a straight bet or your futures position.
In the futures market, if you “invest” in a team to win their championship at the bottom of the market, this “stock” can yield incredible results. For example, Blake Snell was 125/1 to win Cy Young last year. So, over the course of five months, if you wagered $100 on Snell and returned 125x, your investment into that player yielded you $12,500. Also, the Royals rewarded investors or backers much further than the stock market could ever in that time frame.
Yes, I understand the argument can be made when you buy a stock you “own” a piece of that company. No, you don’t own a piece of a team or player you invest your money in in sports betting, but I’d ask you one question: “If you go buy $500 of Nike stock, can you walk right into the board room and make 1% of the decisions for them?” I didn’t think so.
6. The Inefficient Market
Even Mark Cuban has his thoughts on why Sports trading could be the future: