Sports Betting: Investing In Disguise

in #investing2 years ago (edited)

Sports Betting: Investing In Disguise

Describing yourself as an investor compared to a gambler sounds classy but at the end of the day the concept is pretty similar in one thing -- risk management. A lot of people take pride in knowing about the stock market but anyone who knows what's actually going on can see the similarities already. With controversial events that happened with GME and r/wallstreetbets

Defining The Terms: Investing And Gambling

To first compare the similarities we have to define what each category is.

  • Investment or investing means that an asset is bought, or that money is put into a bank to get a future interest from it. Investment is the total amount of money spent by a shareholder in buying shares of a company.

  • Gambling is the wagering of money or something of value on an event with an uncertain outcome, with the primary intent of winning money or material goods. Gambling thus requires three elements to be present: consideration, risk, and a prize.

Where Does Sports Betting Come In All of This?

When people think of gambling they imagine casinos, slots, poker, blackjack etc. Gambling is often frowned upon as a whole. The majority of people associate it immediately with something negative. There is a good reason for that, most gamblers act on emotion and in general just for fun.

Sports betting is however, a different form of gambling that is pretty much the only way to make money in the gambling world.

Familiar Similarities And Beautiful Differences

Responsible gamblers are pretty much investors in disguise. There are huge amounts of similarities that overlap each dimension. When investors/traders want to practice on the market, they paper trade with virtual currency without taking risks, this is pretty much the concept of social casinos in the gambling world. If you want to be a good at both of these things to you need to:

  • research
  • analyze
  • manage capital and bankroll
  • diversify your investments
  • Operate based on facts not emotions

Without these factors both investors and gamblers cannot succeed in their respective areas. You could argue that some casino games like poker or blackjack also need intense bankroll management and analyzing skills, but research and outside factors are not in play. These 2 card games definitely are more skill based but cannot really compare to investing.

In blackjack you sit down at a random table without any prior information, as to what happened an hour or day ago. Even with this kind of information your advantage is pretty much nonexistent. Every game and every hand is separate from each other and the principle of gambler's fallacy applies. The only applicable advantage that has to be mentioned is this example is card counting, which is somewhat illegal and not recommended.

Influence of the Market

Both in investing and sports betting your ‘investment’ varies on the market and in general what other people value a certain stock or bet. Just like in the stock market the volume of people buying and selling fluctuates the price. Sports betting terms are of course much simpler. You have an underdog and a favorite that each pay depending on the sheer volume of independent bets.

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