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Sports Betting As An Investment Class – Part 2

 

An asset class is a group of investments with similar traits and are subject to the same regulations and laws. Therefore, an asset class comprises instruments that behave similarly to each other in the marketplace. Well-known asset classes include:

 

  • Real estate
  • Cash and cash equivalents
  • Equities (stocks)
  • Fixed income (bonds)
  • Commodities
  • Currencies
  • Cryptocurrencies

In our last post, we look at whether we could treat Sports Betting as an Investment Class. Today we continue that theme and look at the potential obstacles and challenges to consider when applying Sports Betting as an Investment Class to your investment portfolio.

 


 


 

Challenges To Consider When Applying Sports Betting as an Investment Class to your Portfolio

We have already covered one of the main hurdles, which is psychological. Regardless of your strategy or win rate, you WILL encounter losing periods. It is not unreasonable to expect a 6 to 12-month downturn, and only patient investors who believe in what they are doing will survive such rocky periods.

 

There are other potential roadblocks, but the good news is that there are solutions.


 

Sports Betting as an Investment Class: Extended Downturns

 

Once you understand how to calculate likely winning and losing streaks and downturns, you know what to expect in the long term. If a system or your portfolio is performing worse than the supposed worst-case scenario, you need to perform a rigorous data check. It is here that tracking your investment pays dividends.

 

If you find that a certain system is potentially no longer profitable, you should cut it and perhaps look to add a new one in its place. However, you should only do this after an extended period once its poor performance can no longer be attributed to expected variance.


 

Sports Betting as an Investment Class: Risk of “Ruin”

When investing in sports betting, you must be prepared to lose your entire investment. However, if you create an appropriate bankroll and staking plan, there is little chance of this happening, assuming your strategies are sound.

 

Your bankroll and stake per wager should depend on the likely strike rate of any system. A general rule of thumb is to set your bankroll at ten times the size of your likely maximum losing streak, and you can increase it to 15 times if you’re risk-averse.

 

Alternatively, you can have a bankroll 3-5 times your likely maximum drawdown.

 

A well-structured bankroll and staking plan prevent ruin!


 

Sports Betting as an Investment Class: Bookmaker Restrictions

Unfortunately, bookmakers can get away with various dirty tricks, including restricting the accounts of people who show competence, let alone win! Over time, you lose accounts until you can no longer get the best value for your bets, which kills your chances of making a long-term profit.

 

The Betfair Exchange offers an antidote of sorts. It is still possible to have your account restricted on the Exchange, but it is far less likely to happen, and it generally offers better odds on events, even allowing for the commission it takes.

 

Set your commission to the lowest possible percentage and ignore the free bets in return for a higher fee option. If you’re wagering thousands of pounds per month on the Exchange, a high commission will hurt your bottom line.

 

Certain UK bookmakers now offer a Minimum Bet Guarantee on horse racing. Even if your account is restricted, you can win up to £500 from a bet with William Hill, Sky Bet, and Betfair. Therefore, with these bookies, you can wager a maximum of £500 on a horse at 2.00 or £50 on a horse at 11.00.

 

Unfortunately, no such rule exists for other sports such as football.


Sports Betting as an Investment Class: Liquidity & Match Selection

If you use the Betfair Exchange, you will come across some issues. Primarily, the lack of liquidity in many markets.

This is a game from the Tanzanian United Republic of Tanzanian Premier League. Less than £300 has been wagered on the match outcome with just four minutes to kick off. You can also see massive gaps between ‘back’ and ‘lay’ pricing due to a lack of liquidity. Without the right level of liquidity, you can’t invest what you like at the prices you want.

 

The Exchange also offers fewer events than other bookmakers, which limits what you can achieve in a sense.

However, there is plenty of liquidity in sports like horse racing. The above screenshot is a random horse race at Lingfield, about two minutes before the start. As you can see, over £165,000 was wagered on the winner of the race.

Just two minutes later, and that figure was over £287,000! There are dozens of horse races in the UK and Ireland each day, so you’ll have no trouble getting the liquidity you crave for betting AND trading.

 

It is a similar story with football games from major leagues. Matches from the English Premier League, the Spanish La Liga, and the German Bundesliga usually have six figures wagered several hours before kick-off.

The above English Championship game had over £114,000 matched on the game outcome market approximately seven hours before starting!

 

You can expect over £1 million to be wagered on all markets by kick-off, with plenty of in-play money changing hands.

 

Predictology covers dozens of leagues and enables you to create winning strategies for each one. As far as ‘minor’ leagues are concerned, you should find enough liquidity by kick-off time if you adopt a volume betting strategy with lower stakes.


 


 

The Biggest Challenge with Sports Betting as an Investment Class?

The biggest challenge with Sports Betting as an Investment Class is likely to be combatting the pre-conceptions and negative connotations sometimes associated with sports betting by the less informed. 

What we have seen in this series is that it becomes clear that Sports Betting as an Investment Class is deserving of this status. It shares many of the charachterists of other investment assets and can be a viable component of any investment portfolio.

It also allows you to invest by risking a relatively small sum, provided that you are patient and set realistic expectations.

Yes, there are inherent risks, but this is also the case with ANY form of investing; that’s WHY sports betting should be considered an asset class! For instance, the value of the FTSE 100 fell by over 30% between February and March 2020 as the impact of the global pandemic took hold.

 

With sports betting, downturns are inevitable, but you can shield yourself when a bad spell comes with the right strategies, portfolio, bankroll, and staking plan. There are workarounds for practically every obstacle with the potential to benefit from returns far beyond what you’ll get from most other forms of investment.

 

Predictology can help you treat your Sports Betting and Trading as a viable and valuable asset within your investment portfolio, allowing you to:

– Build Profitable Betting Strategies

– Leverage 18 Prediction Models provided to all members

– Access Deep Insights

– Spot The Bookies Mistakes – With Our Value Bet Finder

– Automate Your Betting & Trading Strategies with BF Bot Manager

– Utilise In-Play Alerts

– Receive Instant Telegram Alerts

– Deploy our Daily Match Shortlists – Easy To Follow Trading Selections

 

With Predictology, you can trade and bet like a professional and develop your own portfolio to leverage Sports Betting as an Investment Class.

 


 

 

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