Sports Betting as an Investment?

Abstract

This study aimed to explore the potential of sports betting contracts as financial options. Drawing on Moskowitz (2021), it was determined that over $500 billion are invested in the activity annually, with most bettors unable to achieve long-term sustainable returns. Three main betting strategies – Bet Home, Bet Favourite, and Bet Over – were examined, with the suggestion that they may not provide a positive return in the long term. Profit simulations were conducted to determine that point spread prediction may be a better investment option, generating higher profits than traditional betting strategies and providing long-term sustainable returns surpassing those of traditional financial assets. Consequently, the study proposed treating sports betting as an alternative investment, with a few specific strategies suggested to increase the likelihood of success. The results additionally indicated that investors do not need a highly complex forecasting model to be profitable, as general models are sufficient. Alternatively, betting against the three main betting strategies may also be a viable option.

Keywords: Sports Betting; Investment; Forecasting; Machine Learning

JEL Classification: F37, G11