Betting on the stock market is not illegal. Indeed, it’s a venerated pastime, and those who are good at it are celebrated on magazine covers and given honorary doctorates. What these luminaries do, though, is essentially what good sports bettors do: Find an undervalued team (in this case, a company) and bet on it with other people’s money.
The big difference is that the financial markets are exponentially more rigged and “fixed” than any NFL game ever could be, with more attendant chicanery than the average gambler encounters in a lifetime of making wagers. The pointspreads in football games more accurately reflect the true value of a team than do prices on stock, which, no matter how you turn the balance sheets inside out, often have no resemblance whatsoever to the real value of a company. Stocks prices go up and down not because a company is intrinsically worth more or less but because more people are buying into the pyramid scheme that is equity investing. Pointspread odds, on the other hand, go up and down as the public expresses their support for one team or another, accurately pricing a team’s value in the market.
Yet, for reasons which are unclear to us, the average person thinks that those who bet on sports are uncouth and of dubious character. Stock bettors, on the other hand, are gallant “investors.” If the law allows people to put their life savings into stocks, whether or not they really have more or better information than the next guy, we ought to allow them to invest in football teams, too.
The billionaire television personality and owner of the Dallas Mavericks, Mark Cuban, made headlines some time ago when he floated the idea of opening a hedge fund that invested in sports bets. Practically speaking, this kind of venture wouldn’t work because the market in profitable betting opportunities is far too small to accommodate the multi-million-dollar investments a fund of this type requires. But Cuban was trying to make a point: The financial markets are phony; the sporting markets are not.
An Irish exchange, Tradesports, applies stock market principles to sports teams — and political races, award shows, and almost any other event where the outcome has yet to be determined. Investors may trade shares in sports teams (or nominated actresses) as they would shares of Microsoft. If your 3 1/2-point underdog trails by two touchdowns, their share price goes down; if they’re inside the pointspread, their share price goes up. The vig, or juice, on Tradesports is far less than at a traditional bookmaking shop, and investors have the ability to name a price, effectively making the market rather than being beholden to the bookie’s line. If the “sports exchange” idea catches on, the traditional bookmaker could find himself out of business.
Even so, righteous crusaders at the NCAA and in the United States Senate — including Senator John McCain, the anti-sports-gambling maverick who, as The New Yorker reported, has a nasty dice habit, will likely find a way to outlaw places like Tradesports. The only form of gambling the government is willing to endorse is on the equity markets and state lotteries, which offer far worse odds than the most larcenous sports bet.
Imagine, however, if sports gambling were properly taxed, as it ought to be. Imagine if renegade bookmakers paid their fair share to the government. The IRS would be swimming in proceeds it presently has no way of tracking, and our government would have hundreds of millions of extra dollars to use on its various wars, terrorism and poverty chief among them.