Were About To Find Out.
Thursday, September 9th, the Kansas City Chiefs host the Houston Texans on NBC in prime time. This will almost certainly break records for betting activity on a Week 1 NFL game. But will it last?
We know that growth in active trading has been explosive, fueled by startups like Robin Hood and the elimination of trading commissions by the bigger brokers in the Fall of 2019. Trading has never been simpler or easier.
Thursday, September 9th, the Kansas City Chiefs host the Houston Texans on NBC in prime time. This will almost certainly break records for betting activity on a Week 1 NFL game. But will it last?
We know that growth in active trading has been explosive, fueled by startups like Robin Hood and the elimination of trading commissions by the bigger brokers in the Fall of 2019. Trading has never been simpler or easier.
In the first half of 2020, Robin Hood accounts grew by 30%. With new-to-the-game investor favorites like Tesla, Zoom, and DraftKings doubling, tripling and more in the past 6 months, and charts of the SPY and QQQ resembling the old Price is Right “Cliff-Hangers” game (https://www.youtube.com/watch?v=bWEGNe104To ), the average new retail investor/trader has likely had at least some positive trades and is feeling pretty good about it.
And without all of those commissions, day-trading, or at least short-term trading is no doubt looking pretty attractive relative to sports betting as a place to get some action. For most NFL bets, whether with a casino, online sportsbook, or your Uncle Larry’s business associate, you generally bet $110 to win $100. If the sportsbook takes in $110 on the Chiefs, and $110 on the Texans, the guy who picked the winner (including the point-spread of course) gets $210, and the sportsbook keeps the extra $10. Over time, when you pay that 10% commission on losing bets, it means you need to win more than about 52.4% of the time to generate positive cash flow. Most bettors don’t do that well long run, so they either accept that they enjoy the game, like the action, or kid themselves that they make money through selective memory.
Meanwhile, anyone with an E*TRADE account gets an easy peek at their balance and which trades made money. You can forget about all the times the Jaguars or the Bears have disappointed you, but every time I login, I can see that GE stock is worth nothing close to what I paid for it. Though opening up a chart on Tractor Supply Company (TSCO) cheers me right back up.
Crossing Over
We know that some of the football betting regulars are crossing over. Outspoken Tweeter and sports betting guru, David Portnoy (founder of Barstool Sports) has made multiple appearances on CNBC’s Mad Money with Jim Cramer, and DraftKings is now running commercials during that show.
Is stock trading a substitute for betting in the NFL?
The NFL gets the largest share of sports betting action. Academic research finds that baseball betting is a substitute for betting on NFL games (https://journals.sagepub.com/doi/abs/10.1177/1527002511417630 ). When the NFL season starts, even the preseason, betting activity clearly declines for baseball as it grows for football. In author Gary Mayer’s true story of life as a bookie, (https://www.amazon.com/Bookie-My-life-disorganized-crime/dp/0874770238/ref=sr_1_1?dchild=1&keywords=bookie%2C+my+life+in+disorganized+crime&qid=1599692442&sr=8-1 ), he explains that he only handled baseball bets to keep his football betting clients active until the next football season.
The football bettors want action. This Thursday night, they’ll get it. With the double-stuff mustachioed Andy Reid and the Kansas City Chiefs, and a Las Vegas betting total of 54.5, this should be a high scoring game with plenty of fireworks.
Will the bettors forget about trading stocks?
I doubt it, but there will be some trade-offs. If the NFL keeps everyone healthy and the games are good, I’m predicting a dip in the Monday morning trades. Some of their attention and the need for action will once again be met by the NFL. If the market keeps going higher, NFL betting/viewing may lose some steam as people focus their attention on making money in the stock market. However, if the markets hit a rough patch, with a sustained downward trend this Fall, NFL betting and viewership will be stronger than ever. I’m rooting for good games and a strong market, but no matter what happens, there will be some tradeoffs between sports betting and stock trading.
- Dr. Weinbach
And without all of those commissions, day-trading, or at least short-term trading is no doubt looking pretty attractive relative to sports betting as a place to get some action. For most NFL bets, whether with a casino, online sportsbook, or your Uncle Larry’s business associate, you generally bet $110 to win $100. If the sportsbook takes in $110 on the Chiefs, and $110 on the Texans, the guy who picked the winner (including the point-spread of course) gets $210, and the sportsbook keeps the extra $10. Over time, when you pay that 10% commission on losing bets, it means you need to win more than about 52.4% of the time to generate positive cash flow. Most bettors don’t do that well long run, so they either accept that they enjoy the game, like the action, or kid themselves that they make money through selective memory.
Meanwhile, anyone with an E*TRADE account gets an easy peek at their balance and which trades made money. You can forget about all the times the Jaguars or the Bears have disappointed you, but every time I login, I can see that GE stock is worth nothing close to what I paid for it. Though opening up a chart on Tractor Supply Company (TSCO) cheers me right back up.
Crossing Over
We know that some of the football betting regulars are crossing over. Outspoken Tweeter and sports betting guru, David Portnoy (founder of Barstool Sports) has made multiple appearances on CNBC’s Mad Money with Jim Cramer, and DraftKings is now running commercials during that show.
Is stock trading a substitute for betting in the NFL?
The NFL gets the largest share of sports betting action. Academic research finds that baseball betting is a substitute for betting on NFL games (https://journals.sagepub.com/doi/abs/10.1177/1527002511417630 ). When the NFL season starts, even the preseason, betting activity clearly declines for baseball as it grows for football. In author Gary Mayer’s true story of life as a bookie, (https://www.amazon.com/Bookie-My-life-disorganized-crime/dp/0874770238/ref=sr_1_1?dchild=1&keywords=bookie%2C+my+life+in+disorganized+crime&qid=1599692442&sr=8-1 ), he explains that he only handled baseball bets to keep his football betting clients active until the next football season.
The football bettors want action. This Thursday night, they’ll get it. With the double-stuff mustachioed Andy Reid and the Kansas City Chiefs, and a Las Vegas betting total of 54.5, this should be a high scoring game with plenty of fireworks.
Will the bettors forget about trading stocks?
I doubt it, but there will be some trade-offs. If the NFL keeps everyone healthy and the games are good, I’m predicting a dip in the Monday morning trades. Some of their attention and the need for action will once again be met by the NFL. If the market keeps going higher, NFL betting/viewing may lose some steam as people focus their attention on making money in the stock market. However, if the markets hit a rough patch, with a sustained downward trend this Fall, NFL betting and viewership will be stronger than ever. I’m rooting for good games and a strong market, but no matter what happens, there will be some tradeoffs between sports betting and stock trading.
- Dr. Weinbach
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