Sports betting or financial market? Where is it best to invest? Can bets be considered investments?
These are frequently asked questions by those who have their first contact with sports investments. If this is your case, don’t worry! Today, we will answer these and other common questions from beginners in this market.
What Is a Sports Bet?
A sports bet is an investment format in football, tennis, basketball, or any other available modality in which we make our guess at bookmakers.
The dynamic is not much different from betting with friends on a game for your team. In short, whoever loses, pays. That is, if you get your guess right, it’s the bookmaker who pays a promised prize. Likewise, when we make a mistake, it’s the site that takes the money invested.
A very cool aspect of football betting is that, unlike the famous “pools,” here we have a wide variety of markets such as, for example, final result, goal markets (Over or Under), exact score, first half winner, both marks, among other possibilities.
In addition, the prize offered by bookmakers like Fanduel Sportsbook is not fixed. It depends on the quote offered, which will be higher for less likely results by the logic of being something more challenging to get right.
Football Betting Vs. Financial Market: What Are The Differences?
The financial market is quite broad and has several different investments, such as fixed income securities, real estate funds, or shares.
However, sports betting has a profile more similar to variable income. Therefore, the comparison that makes sense is with the stock market (or with derivatives) as long as we have an opportunity for good financial gains but are associated with greater risks.
In this case, what would be the most relevant differences between sports betting and the stock market? We can list the following situations:
Duration: Bets are valid for one match only, while stock investments are forever (or until the company goes bankrupt or private).
Speculation: We will find speculators in both markets due to the high potential for financial returns. These are people who place their bets (on games or companies) without an analysis.
Method of Analysis: In the financial market, it’s common to find a value Investing approach, which consists of buying good deals at discounted prices. In betting, we have the expected Value approach, which consists of betting on odds that pay more than they should.
Results: In both markets, due to the risk profile, the analysis of results must be carried out in the long term — thus reducing the effects of small natural fluctuations.
Why Traditional Investors Don’t Like Bets
If you follow content about the financial market, you have probably already noticed that traditional investors do not like the term “bet.” It’s common for them to correct themselves when releasing this expression, showing an aversion to the concept of betting.
Much of this originates in the structure of our country, which understands gambling as something negative – and, mistakenly, puts sports betting in that same boat.
In practice, however, many financial market investments are gambles. That’s right! As much as you analyze a company before becoming a shareholder, you are betting that it will continue to generate good results, growth, and profit from this appreciation. And there’s nothing wrong with that.
In football betting, the same thing happens. Based on that, we analyze a game and try to find the best possible investment in terms of risk and return. The activities, therefore, are very similar — and we’ll see that next.
Sports Betting Financial Market: Associated Risks
As mentioned earlier, there is a great similarity between the financial market and sports betting – although many traditional investors do not like to admit it.
This situation becomes even clearer when we compare some investment pillars (whether they are sports or not). It’s noticeable that there are risks of losses in these two markets, but with the chance of bringing more attractive returns than traditional fixed income.
In addition, precisely because of this, the two investment models require investors to know how to manage their capital. Do not place bets or buy stocks with a large portion of the available money.
Emotional control is another pillar that marks both activities. Greed can lead investors and punters to risk more than they should in a given situation. Even the rush to recover losses or, in the most extreme case, addiction are points of attention.
Therefore, sports betting and the financial market are closely linked. The pillars for making money in both activities are the same. And that leads us to the essential question of this text: after all, is betting considered an investment?
Is Sports Betting an Investment?
Given everything we have discussed, can we say that sports betting is an investment? Being direct and objective – the answer is yes!
The essence of investment is putting our money into something with the expectation (not guarantee) of a financial return. Fixed income, stocks, bets—It doesn’t matter: we want to make money when we choose to put our money there instead of spending it.
In this case, there is not much distinction between betting and traditional investments in the financial market. However, to consider it a way of investing, you need to take your work as a gambler seriously, in addition to presenting methods and discipline.
Here, we would like to share that professional betting is an investment more attractive than the conventional financial market. However, betting professionally differs from “opening the bet and taking a few guesses.” And this is very important to understand.
Investment Diversification: Betting and Financial Market
This conversation concludes that betting is a great investment opportunity, even more so because the games have no relation to the financial market. That is, it’s a way to diversify your risk.
Equity assets tend to suffer if the government takes poor measures or we enter a political crisis. In good times of the economy, the interest rate may not be enough to cover inflation. However, sports betting is oblivious to all this. What matters is what happens on the field.
It doesn’t mean you should withdraw all the money and focus on betting. No way! As we have seen, the sports market is attractive but comes with very high risk. Therefore, the recommendation is to use a small part of your capital for this market.
In short, football betting and the financial market are not competitors. They are allies. You can use both types of investments to try to make money. Nothing prevents, for example, from keeping your traditional investments but setting aside 2%, 5%, or 10% to place bets.
In other words, the secret of investments lies in diversification. Have a part of your money in fixed income. The rest can be used to take more equities risk or even a betting stake. This balance can even improve the risk-return ratio of your portfolio.