Although the two worlds may seem to be very far apart, there is more in common between the stock market and sports than initially meets the eye. Specifically, there is a distinctly shared skillset when it comes to investing in stocks and betting on sports. Many people may prefer one or the other, but some knowledge of how financial markets work could be very beneficial when it comes to understanding sports gambling.
Both investing in stocks and betting on sports have been around forever but it is the latter that has grown in popularity in recent years in the US, thanks to the Supreme Court overturning the Professional and Amateur Sports Protection Act in 2018. That gave individual states the right to set up their own legal parameters when it came to betting – and many fully legalized the pastime.
Due to this recent development, many people may not have actually bet on sports before (although they will have now seen plenty of adverts about betting if their state allows it). Learning how to bet on sports is crucially important, but if you know a little about the stock market, you could already have the know-how needed.
Beating the Market
Although sports betting is supposed to be a fun pastime – and should be considered as such – the main premise is to make money from your investment. This should sound very familiar to anyone who even just dabbles in the stock markets. Beating the market is what it is all about. The market, in the case of sports betting, is the bookmaker.
It is not enough to simply “put your money where your mouth is” when it comes to either sports betting or investing in stocks. There has to be an understanding of how the market/bookmaker works and how the prices fluctuate. Research is key here and anyone with a background in investing should find this to be second nature.
Risk Management
Many people thrive on the risk that comes with stock trading, but there has to be a basic understanding of managing the risk. The same can be said for sports betting. Understanding what should – and shouldn’t – be risked is crucial if there is to be any long-term success. Short-term success can be achieved through luck alone but that should not be the reason for exploring investing or betting.
It is true that stocks probably offer more flexibility in their risk management. There is a greater opportunity for diversification, hedging, and smart asset allocation. Although there is the chance to hedge your bets, sportsbooks tend to make this as unprofitable as possible, meaning that the risk is usually greater.
Managing Emotion
This is where these two disciplines really share a common bond. Managing emotion is absolutely vital in the world of investing, as it is with sports betting. Getting carried away with the occasion is a sure-fire way of failing with stocks and bets and any good investor should be perfectly placed to keep their emotions in check when it comes to sports.
Even the most professional investor may find sports betting a more emotional affair, however. Whereas trading in stocks can raise emotions, there is not the very basic affiliation and unconditional attachment that sports teams can produce. Avoiding betting on your own team is probably one of the best pieces of advice you can hear, as it may be difficult to detach yourself from that emotional bond.
Understanding Value
One of the first things anyone interested in getting into sports betting must learn is how to understand value. The concept will be familiar to those who have invested in stocks, as they will have experience of following the markets to buy or sell at just the right time to make a profit.
Understanding value in sports betting concentrates more on the prices – or odds – set by the bookmakers. But there is a common thread of needing to watch the markets to strike at the right time. In very simple terms, high odds offer bigger payouts but are less likely to happen and lower odds are a better bet but don’t offer as much potential profit. Finding the balance and spotting where the sportsbook has got it wrong is where understanding value comes into play.
Tips and Information
Our final example of how sports betting and investing in stocks are similar is how you need to accept the help of others. Although the final decision will always be made by the individual, recognizing tips and gathering information from others is key to the possibility of success in both fields.
Doing your research is vital and listening to expert opinion is important to make the most informed investment or bet. It is true that you need to rely on your own knowledge, but that will always come from elsewhere and actively searching for more know-how is always going to help.
Conclusion
The most commonly heard phrase when it comes to trading stocks is that “the value of your investment can go up as well as down” – and that is something that should be remembered when it comes to sports betting too. If you have experience of the former, you will know that not every investment will pay off, and sports betting is just the same.
As you can see, there are a lot of skills inherent to investing that can be used when betting on sports. But you need to recognize that there is no easy cheat sheet to consult for either. Becoming proficient takes time but if you do have an investment background, you may already have a head start on those who are complete beginners.
