Posts

Mark Cuban sports investing hedge fund sports gambling

How Mark Cuban’s sports betting hedge fund took flight

Back in 2004, Mark Cuban wrote a blog post that shocked a lot of people in the business world: he announced (but only somewhat seriously) his interest in Mark Cuban starting a hedge fund based on sports betting. The logic was ironclad, and still is…. there is a better rate of return for smart money in sports gambling investing than in the stock market.

Cuban’s idea had a lot of sound logic behind it: the return at a casino is roughly the same as in certain funds for breakeven purposes (but less expensive), and sports betting is different in that there is an expectation of loss, whereas in traditional investing there is an expectation of profit. This changes the way the money is handled, and smart bettors can expect better returns by having more information. And in this, Cuban argued, sports work out far better than the market: most people have much, much more information about their sports teams than the companies in their hedge funds.

Still, traditional investors scoffed (probably more out of personal offense than actual analysis): could a group of successful sports bettors actually have a better rate of return than market hedge funds? Two groups have tried, and one group has survived, and even moved to the UK to expand. Both are instructive in that they can show us exactly how sports bettors succeed and fail. Read more