Sports Betting Hedge Fund Becomes Reality

Five and a half years ago, Dallas Mavericks owner Mark Cuban caused quite a stir when he announced on his blog his intentions to launch a sports betting hedge fund. Cuban argued that betting on sports, due to the amount of information available, was much easier than betting on the stock market.

A year after he floated the idea, Cuban gave it up, due to a whole bunch of obstacles, including the NBA’s bylaws that prohibit those in the league from being involved with gambling. But that didn’t mean the idea would go away forever.

A investment company in London named Centaur has just launched Galileo.

Galileo’s managers analyze and trade the betting markets, taking the emotion out of the betting game and putting quantitative analysis in its place.

“We have unique software we’ve written over five years that ensures we purely trade on statistics and probabilities,” said Tony Woodhams, managing director of Centaur. “The process is very clinical, which is our edge.”

Woodhams said that Cuban was right on when he said that the sports market has more inefficiencies than the stock market.

Besides emotion, Woodhams said that the sports market has a lot of mispricing, with some bookmakers that don’t often set the best lines for every game. The market isn’t effected by the economy and there’s no intervention from outside parties like a central bank or a government.

Those who got in on the ground floor of the fund have invested a minimum of $150,000. Woodhams said there are fewer than 20 founding investors, with the goal of growing assets under management to $100 million over the next two years.

Woodhams says the sports hedge fund’s projected rate of return is 15 to 25 percent. That’s after fees, which include a 3 percent management fee and a hefty 30 percent performance fee on net profits.

The fund will be betting on soccer, tennis, cricket, horse racing and golf, with plans to expand to the NFL and baseball over the next year.

As for a specific bet, the fund promises it won’t wager more than five percent of assets under management on any one event.

Woodhams is hoping Galileo can clear the necessary hurdles to open things up to American investors in early 2011.

Where are they going to get books to take that sort of action to support a 15-25% ROR?

Thats crazy!

Very good point wallstreet.

Wow, in an era that is talking down the traditional "2 and 20" rip off, these guys actually want to make it "3 and 30"...the only winners in that deal will be the mangers, as usual.

PS

How do I become a manager?

Write em...if you are a quant, can babble on about regressions, and calculus, or astrophysics, and make the tools think people and life are in fact reducible to numbers...well, it worked for a long time back in the 90s, until it did not.

^1000

should be interesting if they actually do profit.

If this is happening, then corruption will slowly start to make its way into sports which would be fuc*kng terrible

No book is going to take their action for long.  Pretty soon it'll be $100 limits.

 

sports has had corruption in it since it was born.....1920s baseball to arizona st in the early 90s to nba refs in 2000+...and those are probably less than 1% of the things that have went down....

Is this the first of it's kind

It occurs to me tat Cuban's fund could make its goal by simply betting each year on a Mavericks collapse in the post season.