An Investment Management Approach to Sports Betting
Session Title
Sports Betting: Strategy & Investment
Presentation Type
Paper Presentation
Start Date
28-5-2026 12:00 AM
Abstract
Investment management has a long and rich history. Money managers have repeatedly innovated so as to adapt to new financial instruments, investor expectations, and technologies. Sports betting can be approached as a form of event-driven investing. Like tradable financial instruments, betting markets offer a menu of contracts—money line, point spread, over/under totals, and parlays—each with a defined contingent payoff. A few stylized analogies are: Betting odds ↔ Price. Odds represent the price paid for exposure to a contingent payoff. The sportsbook hold is similar to transaction costs and market-making frictions (e.g., spread and fees). Implied probability ↔ Market-implied expectation. Odds imply the market’s probability of an event (net of the sportsbook hold). Related analogies include: Expected Value (EV) ↔ alpha, bankroll ↔ portfolio capital, stake sizing ↔ position sizing, line movement ↔ market microstructure, arbitrage ↔ risk-free trades, prop bets ↔ single-factor derivatives, and parlays ↔ structured products. This paper outlines how investment-management ideas can be adapted to a portfolio of sports bets. Key topics include: Diversification — Which bet types to use and how correlation across bets affects portfolio risk. Capital allocation — Bet sizing based on edge and payoff structure. Risk management — Exposure limits and downside control; backtesting, maximum drawdown, risk-adjusted performance, and risk of ruin.
An Investment Management Approach to Sports Betting
Investment management has a long and rich history. Money managers have repeatedly innovated so as to adapt to new financial instruments, investor expectations, and technologies. Sports betting can be approached as a form of event-driven investing. Like tradable financial instruments, betting markets offer a menu of contracts—money line, point spread, over/under totals, and parlays—each with a defined contingent payoff. A few stylized analogies are: Betting odds ↔ Price. Odds represent the price paid for exposure to a contingent payoff. The sportsbook hold is similar to transaction costs and market-making frictions (e.g., spread and fees). Implied probability ↔ Market-implied expectation. Odds imply the market’s probability of an event (net of the sportsbook hold). Related analogies include: Expected Value (EV) ↔ alpha, bankroll ↔ portfolio capital, stake sizing ↔ position sizing, line movement ↔ market microstructure, arbitrage ↔ risk-free trades, prop bets ↔ single-factor derivatives, and parlays ↔ structured products. This paper outlines how investment-management ideas can be adapted to a portfolio of sports bets. Key topics include: Diversification — Which bet types to use and how correlation across bets affects portfolio risk. Capital allocation — Bet sizing based on edge and payoff structure. Risk management — Exposure limits and downside control; backtesting, maximum drawdown, risk-adjusted performance, and risk of ruin.