The online publication Business Insider recently wrote an article about recent reports of hedge funds potentially expanding their portfolios to include sports betting. I was interviewed for this piece and was mentioned in a few places.
This news represents the first step towards what could be a significant shift in the sports betting marketplace: unlike the average recreational bettor (or even betting groups), hedge funds possess the know-how and resources to rival the quantitative toolset that sportsbooks employ to consistently produce near-optimal prices. Moreover, if hedge funds to start to place wagers on sporting events, the size of the betting pool will drastically increase. This would increase market liquidity and raise the ceiling on betting limits. On the flip side, it is likely that hedge fund action would be "sharp" and drive the prices closer to their equilibria. In other words, hedge funds would almost surely increase the efficiency of sports betting markets. This could set up an interesting "arms race" of sorts, where the hedge funds and sportsbooks are vying to be the first to arrive at the true price.
Saddle up.
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