Sports-Gambling Funds Embrace the Unpredictable World of Esports
Sports-Gambling Funds Axe Ping Pong and Embrace Virtual Gaming
(Bloomberg) -- Duane Cousin is one of a handful of professional bettors seeking to turn sports gambling into an investing asset class. But when the pandemic hit, he was left with so little to wager on that he found himself dialing up bets on esports.
Cousin could have put some of the High Roller Fund’s $375,000 in assets into bets on the few other sports, such as Australian horse racing or Ukrainian table tennis, that persisted through the international lockdown. Instead, he delved into a parallel world where gamblers can bet on teams like DRX in League of Legends or Astralis in Counter-Strike.
The challenge is that unlike, say baseball, teams can pop up or change from tournament to tournament. And that makes handicapping particularly difficult. But as the more familiar sports seasons get rolling, he’ll add more esports to his portfolio.
“I’m rooting for the entire segment to do well,” said Cousin, whose hedge fund is based in Las Vegas. “It’ll offer more opportunities.”
As North American team sports tentatively resume competition, Cousin is busy handicapping the quirks of the new normal. He’s trying to figure out, for instance, what home-court advantage means when the National Basketball Association has all its games in the same city, and who gains the edge when teams from Major League Baseball and the National Football League play in empty stadiums.
“There’s a lot of uncertainty in the landscape,” Cousin said. “We’ll have to do research to see what teams can self-motivate.”
Sports-gambling funds, a relatively new phenomenon, can round out a diversified portfolio because they promise uncorrelated returns. Stocks and bonds may go through bullish and bearish spells, but games have zero connection to other asset classes and sophisticated bettors always have a shot at finding an edge.
The coronavirus snuffed that theory, at least temporarily. Stock markets not only kept trading, they surged, while sports bettors searched the globe for action.
Bad Timing
The timing wasn’t so hot for those looking to expand into the otherwise wide-open and burgeoning field. Susquehanna International Group LLP, a quantitative-trading firm headquartered in Bala Cynwyd, Pennsylvania, was in the process of building up a sports-betting division as games across the globe were canceled. The firm didn’t respond to requests for comment.
Fund managers such as Cousin are counting on pent-up demand to make up for time away. And it seems they may get it, based on betting so far.
The first live mainstream event since the pandemic lockdown in the U.S. was the PGA Tour’s Charles Schwab Challenge in Fort Worth, Texas, the weekend of June 11. FanDuel saw a 10-fold rise in wagers over 2019. A week later, daily fantasy sports entries on the PGA’s RBC Heritage tournament more than tripled from last year, according to the fantasy-betting site.
Brendan Poots’s familiarity with horse racing in Australia turned out to be a boon for Melbourne-based Priomha Capital. It was one of the few sports unaffected by the lockdown.
The shortage of other bet-friendly competitions helped keep money rolling in, Poots said in an email.
“Wagering markets are so deep and liquid that they would have to be reduced by over 60% for us to be impacted from a trading perspective,” Poots wrote.
Both Cousin and Poots, who avoided a match-throwing scandal that rocked Ukrainian ping pong during the shutdown, expressed some concern that with unemployment so high and economic prospects in general so muddy, the casual bettor may not participate to the fullest.
Cousin, however, is now an esports fan. One thing he said he gained during the pandemic was an appreciation for the sector.
“The names of the teams tickle me,” Cousin said.
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