“In the short term, there will be a lot of attempts by companies big and small to use their own versions of big data to be predictive in sports, financial markets and other industries. In the long term, it will come down to what sources of information and which companies will help create the most powerful learning and reproductive algorithms and who will own those algorithms.”
The above is a quote given to ESPN by Mark Cuban, the eccentric owner of the Dallas Mavericks, a basketball team in the National Basketball Association in the USA. Cuban, who favors expanding legal sports betting, is an investor and Digital entrepreneur who was personally valued at 3.2 billion dollars as of February of last year. He also isn’t the only person interested in expanding it. There are signs of companies such as Microsoft, Google, and Facebook showing significant interest in benefiting from the large-scale legalization of sports betting.
Sports betting is a zero-sum game, similar to Texas Hold-em poker, wherein a bettor’s gains and losses are balanced by the gains and losses of other participants. By balancing this accurately, bookmakers make a certain average percentage of every bet placed. Having more information than your opponents—not necessarily the bookmakers—will decide whether you make a profit from your betting endeavors. Most likely you won’t, and this is due to a large amount of professional gamblers and (illegal) betting syndicates that take a disproportionate share of the profits.
How do these people shift the balance in their favor? Most of it comes down to what Cuban eludes to: information. The ability to access, process, and gain insight from data gives bettors the edge they are looking for. From pre-match odds to in-game odds based on historical results and player/team strengths, the slightest edge can overcome betting fees and bookmaker margins. And with cloud solutions and bare metal machines increasing the amount of data we can process, it’s almost a race to see who is best at predicting the future using digital technology.
Currently one of the largest untapped betting markets in the world is in the process of legalizing sports betting. After the rise of daily fantasy sports, sports betting looks to be next to be legalized in the USA in the next couple of years. This expansion of the globe’s legal gambling market will offer big opportunities for anyone who has the knowledge, equipment, and time to gain an edge on the market using digital technologies. Large syndicates are thought to be using robot betting and machine learning already, and with the developments in these areas, this technology could become more readily available for the “common man.”
Additionally there is another opportunity. The state of Nevada passed a bill in 2015 that allows licensed betting operators to set up schemes for out-of-state bettors. The idea is quite similar to how mutual funds work. You give an organization money to bet for you on the various betting markets. Could we see a future where you can expand your investment portfolio by putting money into in a number of betting mutual funds, possibly even ones being run by large multinational (technology) companies?
In a zero sum game someone always has to lose. Like in Texas Hold-em poker, binary stock options, and sports betting the person losing will be the person who doesn’t have the time, resources, or knowledge to master the art of the game. People or organizations with the ability to collect data, process it in large volumes at real-time speeds, and write code that can automatically action the findings from this data will change the market as we know it.
Digital transformation will happen whether you are ready or not. Will betting companies be ready for the changing market, which new entrants to the market will challenge them, and who will win? If we only had some odds to indicate what will happen next.