What is sports betting derivatives?

Futures

Futures are a type of sports betting derivative where bettors wager on the outcome of a future event, such as the Super Bowl or World Cup, before the event takes place. In 2019, the amount wagered on sports betting futures in the US was $6.8 billion, representing an increase of 30.8% from the previous year. Despite facing scrutiny and regulations from some parts of the world, futures remain a popular form of sports betting. (Source: American Gaming Association)

Options

Options are financial derivatives that provide the holder with the right, but not the obligation, to buy or sell an asset at a predetermined price. While options are most commonly associated with equities, they can also be used for sports betting. In 2020, there were 4.05 billion options contracts traded, with 79.72% of total options trading volume attributed to equities. Online sports betting is becoming increasingly popular, with 85% of all sports bets in the United States placed online in 2020. The global sports betting market is projected to reach $155.49 billion by 2025.

Spread betting

Spread betting is a form of sports betting derivative that allows individuals to speculate on the price movements of a particular asset, such as a sports team’s performance in a match. This type of betting is particularly popular in the United Kingdom, where it was first introduced in the 1970s. The global spread betting market has been growing steadily over the past few years, with the market size increasing from USD 3.31 billion in 2018 to an estimated USD 4.81 billion in 2021. Despite being banned in some countries, spread betting remains legal in the UK, making it a popular option for sports enthusiasts and traders alike.
(Source: Zion Market Research, Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2020-2026)

Handicap betting

Handicap betting is a type of sports betting derivative where a handicap is applied to the team or player with the perceived disadvantage to level the playing field and provide more balanced odds. This type of betting is popular in sports such as football, basketball, and rugby. The handicapped team or player must then win by a greater number of goals or points to overcome the handicap and win the bet. Handicap betting has remained a steady form of sports betting with a global search volume of approximately 46,000. Commonly accessible references for factual information on sports betting derivatives can be found on reputable sports betting websites and forums.

Proposition bets

Proposition bets are a type of sports betting derivative that allows bettors to wager on specific outcomes within a game or event. They have become increasingly popular, with over $5 billion in bets on new derivatives in just a few months. Proposition bets now account for 80% of all sports betting handle in some states. Experts predict that the market for sports betting derivatives, which includes proposition bets, could reach $11 billion by 2024. Proposition bets have generated $2.14 billion in revenue for sportsbooks since their introduction.

Parlays

Sports betting derivatives are bets made on the outcome of sporting events. One type of sports betting derivative is a parlay, which involves combining multiple bets into a single wager. Parlays offer the potential for larger payouts than individual bets, but also come with increased risk as all bets must be correct for the parlay to pay out. The total global sports betting market size was valued at $203 billion in 2019, and approximately 10% of US adults place sports bets. The odds of winning a 2-team parlay are 13/5 or +260.

Teasers

Sports betting derivatives refer to various types of wagers that are based on the outcome of a sporting event. One such type is known as teasers. Teasers are bets that allow the player to adjust the point spread in their favor by a certain number of points for each game. This makes it easier for the player to win the bet as they have a greater margin for error. According to statistics, teasers have a win percentage of 64.6% with an average spread of 6.05 points. These figures make teasers a popular choice among sports bettors who are looking for an edge over the bookmakers.

Totals (over/under)

Totals (over/under) is a type of sports betting derivative where the bettor wagers on the total number of points or goals scored in a particular game. The bettor can choose to bet on whether the final score will be over or under the predicted total. According to commonly accessible references, totals (over/under) bets have a winning percentage of 52.9%. The average payout for this type of bet is 1.91x the original wager. Totals (over/under) is popular among sports bettors for football, basketball, and baseball games.

In-play betting

In-play betting is a type of sports betting derivative that allows bettors to place wagers on an event while it is still ongoing. In 2021, the global sports betting market size was valued at $203.02 billion, with an expected compound annual growth rate (CAGR) of 10.8% in the next few years. Half of the sports betting revenue comes from in-play betting as it is gaining popularity among sports enthusiasts. The market value of in-play betting is expected to grow at a CAGR of 9.3%. These statistics show the tremendous potential in the sports betting industry for in-play betting derivatives.

Moneyline bets

Moneyline bets are a popular form of sports betting derivative. It is a simple type of bet where the player chooses which team they think will win. The odds are based on a $100 stake, with minus signs indicating the favorite and plus signs indicating the underdog. For example, if the odds are -200, it means the bettor needs to wager $200 to win $100, while if the odds are +200, it means the bettor will win $200 for every $100 wagered. Moneyline bets have a 50% chance of winning, making them a popular option among sports bettors. (Reference: ESPN)

Hedging

Hedging in sports betting is a strategy used by 55% of sports bettors to minimize risk. In 2020, the global sports betting market was valued at a staggering $350 billion. The market is projected to grow at an annual rate of 7.9% from 2021-2028. By using hedging strategies, sports bettors can lower their risk and potentially increase their profits. These statistics show that sports betting is a major industry with substantial potential for individuals who use sound hedging strategies.

Arbitrage betting

Arbitrage betting is a type of sports betting derivative where a profit is guaranteed by placing bets on all possible outcomes. This is possible due to different bookmakers offering different odds for the same event, which allows for arbitrage opportunities. Over 60% of global betting revenue comes from sports betting and professional bettors widely use arbitrage betting to make guaranteed profits. Arbitrage betting is legal and provides a safe and reliable way to profit from sports betting.

Scalping

Sports betting derivatives are financial instruments that allow investors to speculate on the outcome of sporting events. One example of a sports betting derivative is “scalping”, which involves placing multiple bets on opposing outcomes with different bookmakers to guarantee a profit regardless of the outcome. The global sports betting market was valued at $203 billion in 2020 and is projected to reach $155 billion by 2025. In the US, sports betting is legal in 30 states and a total of $21.5 billion was wagered on sports in 2020. By utilizing scalping and other sports betting derivatives, investors can participate in the growing sports betting industry.

Bankroll management

Bankroll management is a key element of successful sports betting. With the global sports betting market valued at $203 billion and the expected growth rate at 8.83%, it is important to approach sports betting with a solid strategy in mind. 21 states in the US have already legalized sports betting, leading to $76.5 million spent on sports betting derivatives. By properly managing one’s bankroll, bettors can increase their chances of long-term success and minimize risk. Understanding the market and the odds can lead to profitable returns.

Kelly Criterion

Sports betting derivatives are financial instruments that derive their value from the outcome of sports events. One such derivative is the Kelly Criterion, which is a mathematical formula used to determine the optimal size of a series of bets. The formula takes into account the player’s edge, which is the probability of winning the bet, and the payoff odds. The Kelly Criterion can help bettors maximize their profits while minimizing their risk of ruin. The sports betting market is projected to grow at a significant rate in the coming years, with the online segment accounting for a majority of the market share. As of 2021, the global sports betting market is valued at $218.47 billion, with an annual growth rate of 9.6%. Approximately 67% of sports bettors use mobile devices to place bets, and sports betting is legal and regulated in 28 countries worldwide.

Poisson distribution

Poisson distribution is a probability distribution model commonly used in sports betting derivatives. Sports betting is a form of gambling that involves placing a wager on the outcome of a sporting event. The global sports betting market size was valued at $203 billion in 2020, with the North American market reaching $20.9 billion. Poisson distribution is used to predict the number of goals scored or points earned in a sporting event based on historical data. It is based on the assumption that events occur independently and at a constant rate over time. By using Poisson distribution, sports bettors can gain an edge over the house and make more informed wagers.

Expected value

Sports betting derivatives are types of wagers that are based on the outcome of a sporting event, but do not involve placing a bet on the final score or winner. Instead, these bets are based on variables such as point spreads, total score, and player or team performance. One important concept in sports betting derivatives is expected value, which refers to the amount of money that can be gained or lost over the long run. By calculating the expected value of a bet, bettors can determine whether or not it is likely to be profitable in the long term. According to industry data, sportsbooks typically charge an average commission of 1.5% on total handle, while winners receive an average of 40% of the total handle. Additionally, the average odds for a two-team parlay are 2.6.

Margin

Margin constitutes 45% of the sports betting derivatives industry. It refers to the amount of money that a bettor must deposit in their account to cover their losses if their bets are not successful. Margin helps balance the risks between the bookmaker and the bettor. Other types of sports betting derivatives include wagering, spread betting, and exchange-traded derivatives, which constitute 21%, 16%, and 13% of the industry, respectively. These derivatives are designed to provide opportunities for speculators to profit from changes in the price of sporting events. (References: Investopedia, Forbes)

Vigorish (juice)

Sports betting derivatives are complex and technical financial instruments whose value is derived from the outcome of a particular sporting event. Vigorish or juice is an important aspect of sports betting derivatives and refers to the commission that a bookmaker charges for taking bets. This commission is typically 10% of the bet and makes up 5% of the total bets in sports betting. The global sports betting market size is currently valued at USD 203 billion and is projected to reach USD 308 billion by 2023. 15% of US adults bet on sports at least once a year.

Probability

Probability is a key concept in sports betting derivatives, which is a form of financial instrument that is used to trade on the outcome of sporting events. This market has seen tremendous growth in recent years, with a market size of USD 85.047 billion in 2020 and a projected CAGR growth of 9.2% between 2019 and 2025. While football dominates the global sports betting market with a 43.5% market share, basketball and horse racing are also popular choices. Understanding probability and the factors that affect it is essential for successful sports betting.

Odds

Sports betting derivatives refer to various types of financial instruments that are based on the outcome of sporting events. One of the most important aspects of sports betting derivatives is understanding odds. Odds represent the probability of a particular outcome. The higher the odds, the less likely an event is to occur. Conversely, the lower the odds, the more likely an event is to occur. In 2019, the global online gambling market was valued at $53.7 billion, and the global sports betting market was valued at $203 billion, with 65% of that being online sports betting (source: statista.com). Understanding odds is crucial to making informed decisions when it comes to sports betting derivatives.

Point spread

Point spread is a sports betting derivative, where a handicap is placed on the favored team in order to make the betting more balanced. Essentially, point spread betting is used to even out the chances of winning for both teams and to attract equal bets from each side. The total wagered amount in the point spread betting market has steadily increased over the past several years, reaching 6.8 billion USD in 2019. (Source: American Gaming Association).

Line movement

Line movement refers to the change in odds or point spreads for a particular sports game. Sports betting derivatives involve creating financial instruments based on these movements, allowing individuals to invest in the outcome of a sports event without actually placing a bet. This type of investment is growing in popularity, particularly in the US where the number of sports bettors has reached 20 million and the amount wagered on sports annually is USD 150 billion. The global sports betting revenue is even more staggering, reaching USD 203 billion annually. These statistics demonstrate the potential for sports betting derivatives as a lucrative and enduring investment opportunity.

Public betting vs. sharp betting

Sports betting derivatives are financial instruments that allow individuals to invest in the outcome of sporting events. One key distinction in sports betting is between public betting and sharp betting. Public bettors are recreational bettors who wager based on their personal opinion, while sharp bettors are professional bettors who use data analysis to determine the most favorable odds. Learning about these different types of betting can help individuals make more informed decisions when investing in sports betting derivatives. (Reference: ESPN, “A guide to sports betting terms and phrases”)

Bookmakers

Bookmakers, or organizations that take bets on sporting events, play a significant role in the global sports betting market. According to Grand View Research, the global sports betting market size is valued at $203 billion in 2021 and is expected to grow at a CAGR of 10.4% from 2021 to 2028. Bookmakers generate a significant portion of this revenue, with PWC reporting that they account for 70% of the sports betting revenue in the UK. The most popular sports for betting vary across regions and cultures, but sportspromedia.com reports that football, basketball, and horse racing are consistently among the top sports for betting worldwide.

Exchanges

Sports betting derivatives are financial instruments that allow investors to bet on the outcome of sporting events. For exchanges, offering sports betting derivatives can be a lucrative business with the global sports betting market estimated to be worth $104.31 billion in 2018 and expected to grow at a compound annual growth rate (CAGR) of 8.62% through to 2021. By 2024, the market is projected to reach $203.33 billion with an expected CAGR of 8.83%. With such high potential growth, exchanges have an opportunity to offer a range of sports betting derivatives to meet the demands of investors globally.

Outsiders

Sports betting derivatives are financial instruments whose value is determined by the outcome of a sports event. These types of derivatives cover a variety of markets, including spread betting, total betting, and money line betting. The global market for sports betting derivatives was valued at $49.2 billion in 2019, but due to the COVID-19 pandemic, the market size decreased to $42.7 billion in 2020. The market is projected to further decrease to $27.4 billion in 2021 due to the reduced number of sports events and fewer people participating in these types of bets. However, despite these challenges, the market is expected to recover and grow at a CAGR of 15.6% from 2021 to 2025 due to the increasing popularity of online and mobile sports betting platforms. Factual reference: Zion Market Research.

Sharps

Sharps, in the context of sports betting, refer to people who are considered experts or professional bettors. These individuals are known for consistently making informed and profitable wagers. Sports betting derivatives, such as futures contracts and options, have become increasingly popular among investors looking to capitalize on the growing sports betting market. In 2019, the global sports betting market was valued at $150 billion, with a projected CAGR of 8.62% from 2019 to 2027. Football/soccer is the most popular sport to bet on, and the United States has the largest market for sports betting. As the sports betting market continues to grow, the need for accurate and reliable information becomes more important for both sharps and investors alike.

Squares

Sports betting derivatives, also known as squares, are a popular way for sports fans to legally place bets online. In recent years, there has been an 80% increase in online sports betting, leading to the legalization of sports betting in 11 states across the US. It is predicted that by 2025, the revenue generated from sports betting will reach $13 billion. Derivatives, such as squares, offer fans a unique and exciting way to engage with their favorite sports and potentially earn some extra cash.

Steam moves

“Steam moves” refer to significant changes in the lines of a sports betting market that are brought about by sharp bettors with an edge. Sports betting derivatives are essentially financial instruments that are derived from the underlying market of sports betting odds. These derivatives are traded on various platforms and exchanges and are used by bettors, traders, and investors to speculate on the future prices of sports betting markets. The global sports betting market has been rapidly growing, and is expected to reach a value of $433 billion by 2023. The annual revenue of the sports betting market is already an impressive $203 billion. Sports betting derivatives offer a viable way to engage with this market for those interested in investing.