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EXECUTIVE SUMMARY

• The Purpose of this paper is to demonstrate that sports bets are financial

derivatives, and in most cases, a more detailed form of options contract.

• The key difference between a sports bet and a traditional options contract is the

underlying asset/event that the contracts are linked to.

• A sports bet is linked to a sporting event while traditional options contracts are

often linked to business and macro economic events.

• Focusing on the goals market in the English Premier League, data was gathered

and analysed from over 6,000 different football matches from year 2000 - 2016.

• The major finding was that despite being a primary tool for gambling and

entertainment, sports betting nonetheless provide tremendous opportunities for

“intelligent speculation”

• This paper suggests techniques through which fund managers and individual

investors can use sports betting to generate uncorrelated positive alphas.

Kehinde Stephen Adesodun.

kennyadesodun@gmail.com

December 2016

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TABLE OF CONTENT

(1) Introduction.

(2) Literature Review.

(3) Data Collection and Analysis.

3.1. Comparative Analysis

3.2 Skill, Luck & Probability

3.3 Intelligent and Unintelligent Speculation

(4) Conclusion.

(5) Reference.

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4

1. Introduction

Investment management is often concerned with the management of financial trading

instruments and the decision-making processes that underline the trading of such

instruments.

Financial trading is simply the buying, selling or exchanging of financial instruments

such as stocks, bonds, commodities and derivatives, with the intention of making

financial gains and/or transferring financial risks. Sports betting also fall under the

umbrella of financial trading, sometimes blurring the line (if any) between gambling and

investing.

Sports betting markets, just like other financial markets are information sensitive and

events driven; hence, the success of a financial trader on these markets depend not only

on market efficiency, but also on credible and valuable information which has not been

adequately reflected through market efficiency, this is central notion of the “information

market hypothesis (IMH).

From an IMH perspective, some financial trading instruments viewed as investment

vehicles share similar characteristics with some gambling instruments. For example, a

fixed odd sports bet is essentially an options contract tied to the outcome of a future

sporting event rather than the outcome of a future economic phenomena.

Sport bets, options contracts, futures contracts and even common stocks are all

financial derivatives because they derive their value from an underlying entity, event,

expectation or asset. The prices of common stocks are evanescent and illusory because

equity shares are themselves merely derivatives of the returns created by the publicly

traded corporations and the productive investments in physical capital and human capital

that they represent. (Bogle 2012).

Therefore, the key difference between fixed sport bets and traditional financial

derivatives is the underlying event. Sport bets are linked to sporting events; derivatives

are bets linked to financial events. For example, credit default swaps are essentially bets

on whether a corporation can meet (future) interest payment on its bonds (Bogle 2012).

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This research expands on the publication of Lovjit Thukral and Pedro Vergel Eleuterio

titled “Sports betting as a new asset class: Can a sports trader beat hedge fund managers

from 2010 – 2016?” As part of this paper’s argument that sports betting should be viewed

not only as a gambling instrument but also as a legitimate financial trading instrument, a

comparative analysis between a fixed sports bet and a traditional option contract was

conducted.

This paper focuses on fixed odds betting on the English Premier League (EPL) goals

market instead of horseracing like Thukral and Eleuterio, simply because football is the

most popular sports in the world and the EPL is one of most watched leagues.

Data are gathered by analysing 6,080 different EPL matches over 16 years, the main

purpose of this research is to show that sports betting (on the EPL goals market) can

provide an attractive opportunity to generate uncorrelated returns for fund managers, not

only through horseracing as established by Thukral and Eleutrio, but also through

football betting. Therefore, sports betting should be viewed as a legitimate form of

financial trading which deserves its own category as an alternative asset class.

This paper goes a step further by suggesting methods that a fund manager can use to

generate uncorrelated alphas through betting on the EPL goals market.

This report has five sections after this introduction. Literature review is provided

followed by data collection and analysis which established the foundation for the

principles, assumptions and arguments employed in this paper as well as discussing the

key findings and implications of the finding. The conclusion is a detailed closing

argument that captures and summarizes key points across all five sections.

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2. Literature Overview

Financial derivatives play very important roles in financial markets and institutions.

Transfer of financial risks for hedging and speculative purposes are possible on financial

markets through financial derivatives instruments.

Per the International Monetary Fund (IMF. 1993), financial derivatives are financial

instruments linked to specific financial instruments, indicators or commodity, through

which specific financial risks can be traded on financial markets in their own rights.

Sport bets are also financial instruments linked to specific sporting events through

which specific financial risks can be traded in financial markets in their own rights.

(Pickens 2006).

Financial derivatives such as options contract and fixed sport bet are information

sensitive financial instruments built on the foundation of one party's assumption of the

future value of the underlying event or asset. These assumptions are usually based on

different levels of information, intuition, quantitative and qualitative analysis. Inevitable,

some assumptions will be more superior to others making superior information the

determinant factor of success when trading financial derivatives, especially for

speculative purposes.

While insider-trading laws are designed to curb the abuse of non-public (superior)

material information on regulated markets, there will always be people trading on

superior information, people trading on logic, people trading on emotions, people trading

on luck, etc. Furthermore, two people could have precisely the same information and yet

arrive at different conclusions.

A financial derivatives transaction involves at least one speculator and one hedger, as

such; a financial derivatives trade is a zero-sum transaction which only one party (either

the buyer or seller) will make a profit from that given trade.

For a premium paid in the present, an option contract gives a party the right but not the

obligation to buy or sell an asset at an agreed future price. The party has a right to a

profitable settlement if the contingency is met (favourable future price of underlying

asset), otherwise the premium paid for the contract is lost.

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Sports bet works in the same manner; for a premium paid (stake), a party (punter) has

the right to a profitable settlement, contingent on the outcome of a future sporting event

being met.

The first issue raised in this research is the intellectual flaw that exist in categorising

traditional option contracts as legitimate financial trading instruments while fixed sports

betting contracts are categorised as gambling instruments, despite fixed sport bets being

more detailed option contracts.

From a literal standpoint, financial derivatives such as option contracts are merely bets,

bets linked to the outcome of financial micro and/or macroeconomic phenomena while

sport bets are option contracts linked to the outcomes of sporting microeconomic

phenomena.

Sports serve as the underlying entity through which option contracts are traded. In the

same fashion that traditional asset classes, stocks and commodities serve as underlying

securities for traditional option contracts traded on regulated derivatives exchanges.

Quantitative analyst pair at Long Rock Capital, Lovjit Thukral and Pedro Vergel

Eleuterio found in their 2016 publication that a simple betting strategy of consistently

laying the four favourite horses in horse races across the UK from 1st January 2010 to 7th

January 2016 provided uncorrelated returns to the market. The simple strategy also

outperformed the Credit Suisse Hedge Fund Index and the S&P 500 Total returns on

average for the last 6 years. (Thukral, Eleuterio. 2016).

This paper focused on football instead of horse racing to find if such opportunities

exist in football betting for intelligent speculation and if it can serve as an alternative

asset to generate uncorrelated returns.

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3. Data Collection and Analysis

In 66% of the 6,080 different matches, at least a goal was scored in the 60th - 90th time

range and in 48% of matches at least a goal was scored in the 75th - 90th minute range.

The above data reveals an interesting trend, which can produce tremendous opportunities

for profitable derivatives trading on the EPL goals market.

The bookmaker Bet365 often price the probability of another goal in EPL matches at

the 60th minute mark at a range of 1.40 and 1.60 (a high price expectation of 72% chance

of another goal and a low-price expectation of 63%). The 75th minute mark price for

another goal usually ranges from a low of 1.80 (55%) to a high of 2.5 (40%).

An unintelligent speculator (defined in later chapters) only need to place a bet of the

same amount every time on another goal in an EPL football match after the 60th minute at

minimum odds of 1.52 to guarantee a profit in the long term. For the intelligent

speculator, however, this can prove to be a goldmine for an analyst that can successfully

utilise strong information to derive an edge slightly greater than the 66% blind bet

accuracy.

2001 380 253 1862002 380 237 1842003 380 255 1942004 380 245 1822005 380 248 1712006 380 240 1612007 380 247 1662008 380 262 2002009 380 240 1832010 380 267 2042011 380 254 1942012 380 264 1852013 380 253 1822014 380 250 1812015 380 254 1772016 380 242 175

TOTAL 6080 4011 2925

SEASON ENDING MATCHES

PLAYEDGOAL AFTER 59TH MINUTE

GOAL AFTER 74TH MINUTE

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3.1 Comparative Analysis;

A bet occurs when 2 parties agree that one party pays the other an agreed sum based on

the outcome of a future event that will prove one of them to be either right or wrong.

Moreover, just as you can bet on the outcome of a tennis match without owning the

tennis players, you can bet on the outcome of a financial market phenomenon such as

future price of a commodity without owning the underlying commodity.

For example, John agrees to pay James $20 (on a $5 premium paid by James) if

Manchester United defeat Chelsea tomorrow, hence a bet has occurred, because the

outcome will either see James profiting $15 if Manchester united wins, or John profiting

$5 if Chelsea avoids defeat (win or draw).

Consequently, if James and John agree (on a $10 premium paid by James), that James

can purchase 100 XYZ shares from John at $10 per share in 3 months, a bet has also

occurred. The outcome in 3 months will either see James exercise his right to purchase

for $10 per share and profits the difference if XYZ is trading higher than $10.10 per

share. On the other hand, John profits $10 If XYZ is trading for less than $10 per share.

The above example of a sports bet and option contract establish that they are both

financial transactions that can be engaged in for speculative and, or hedging purposes. An

options contract, just like a football match, also has three possible outcomes; on the

money (a draw), in the money (a win) out of money (a loss).

Usually when bets are placed, there is one winner and one loser, the financial system is

a classic example in which when investors trade with each other and one is a winner and

one a loser (Bogle 2012).

At expiry, an option contract will also have one winner (the party that makes a profit)

and one loser. Regarding sports betting also, after a sporting event, the bettor (punter) or

the bookmaker (bet taker) will be either the winner or the loser.

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3.2 Skill, Luck & Probability;

Michael Mauboussin in his book “The Success Equation” lists the three categories, which

most activities fall.

The first category is “pure luck and no skill” activities. Flipping a coin or playing the

slots machine at the casino for example, are purely random activities that require no skill

in predicting their outcomes.

The second category is “pure skill and no luck” activities. A tennis match between an

amateur tennis player and the world number 1 tennis player will always see the number 1

tennis player win (Cateris paribus), not because of luck but simply because of pure skill.

The third category “skill and luck” activities, which applies to the world of

competitive sports, business and investing because these activities incorporate elements

of skill and doses of uncertainty.

Unlike rolling a dice, outcomes of sporting events and price movements of securities

are not completely chance dependent (especially in the long term). These activities are

subject not merely to risk (an arithmetic concept), but also to the broader uncertainty that

generally shadows the future. Unfortunately, uncertainty, as opposed to risk, is an

indefinite condition that does not conform to numerical straitjackets (Lowenstein, 345).

In essence, sporting events and financial markets have both measurable and

unmeasurable factors influencing their outcomes. They are primarily skills & abilities

(quasi-quantifiable factors) dependent and luck & uncertainty (quasi-unquantifiable

factor) variable. Since uncertainty is impossible to accurately quantify, it can only be

estimated using series of available information or simply assumed away.

Mauboussin explained that the more equal the skill and ability of competitors, the

greater the influence of luck and the more unequal the skill level, the lower the role of

luck. For example, luck is more likely to play a bigger role in a tennis match between

players ranked 15th and 16th than it will in a match between players ranked 15th and

160th.

The central premise of competitive sports is the fact that high degree of uncertainty is

inherent between thrilling and exciting sporting encounters.

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Outcomes of sporting events have mathematical probabilities (assuming events are

completely random), implied probability (estimated market probability of an outcome

reflected through the price attached to each outcome) and true probability; (which can be

known after the outcome). However, since uncertainty cannot be accurately measured

and factored in, luck can always play a role in any uncertain event, causing true

probabilities, implied probabilities and mathematical probabilities to differ.

For example, assuming football matches are completely random, the mathematical

probability (P) of any given outcome in a football match is 33.3% (1 out of 3 possible

outcomes). Despite sporting events being primarily skill and ability based, sometimes

outcomes are decided by chance or luck (especially among equal opponents), the role of

chance therefore cannot be completely overlooked in such circumstances. Mathematical

probability remains a valid consideration in the outcome of sporting events.

Sports involve people with different levels of skills and abilities competing against

each other, which make some outcomes more likely to occur than others do. The implied

probability (odds) is the estimation of the likelihood of an outcome occurring based on

careful observation and analysis of the teams, players, and other factors that could

influence the outcome, which can also include past outcomes.

Implied probabilities are reflected in the market prices through the odds assigned to

each outcome. Implied probabilities are not a guarantee and do not always reflect the true

probability of an outcome.

In the above sports bet between John and James, the mathematical probability of

Manchester united defeating Chelsea is 33.3% (desired outcome/number of total possible

outcome). The odd is four (payout/premium) hence the implied probability (imP) is 25%

(imP = (1/odds) %). There is an obvious mismatch between the mathematical probability

(33.3%) and the implied probability (25%).

Just like bookmakers’ implied probability, investment management principles are also

grounded on the implied probability of future risks (the degree to which an investment is

likely to be risky). Due to uncertainty, the probability of an outcome occurring or an asset

being risky can only be implied.

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The first significant difference between fixed odd sports betting (like in the example of

James and John above) and traditional option contracts is that with sports bet, both parties

can precisely quantify the mathematical and implied probabilities of their risk exposure

and expected returns.

The sport bet between John and James can be expressed as James risking $5 for a 33%

mathematical chance and a 25% implied chance of making $15. John is risking $15 for a

66% mathematical chance and a 75% implied chance of making $5.

The (call) option contract between John and James cannot be adequately expressed

mathematically. While James knows for certain his risk exposure ($10), his expected

return is unknown, and while John knows his exact expected return going into the trade

($10), his risk exposure remains an estimate at best.

Sports bet are more clearly defined option contracts with no volatility in risk exposure

or expected return. The amount that each party stand to lose or profit is known entering

the contract, whereas with traditional options, only the amount that a party stand to either

lose or profit can be known entering the contract.

The writer of a call option contract knows exactly how much stands to be received but

not exactly how much can be lost, the buyer knows exactly how much stands to be lost,

but not exactly how much can be gained.

Put options are similar except, the amount of money that the writer of a put contract

stands to lose and the amount that the holder of such put contract stand to gain all fall

within a given limited range.

So even though the writer knows exactly how much they stand to profit and don't know

exactly how much they stand to lose, there is a maximum amount they can lose. And

even though the option holder knows exactly how much they stand to lose and not

exactly how much they stand to gain, there is a limit on how much they can gain.

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3.3 Intelligent and Unintelligent Speculation.

The designation of capital while accepting a level of risk in pursuit of more capital or

avoidance of a larger loss of capital is the foundation of investment management. The

term investment according to economist, in general refer to abstaining from current

consumption to use the freed resources in ways to increase future consumption” (Brenner

& Brenner. 1990).

This definition, however, cannot distinguish between the terms “saving”, “investment”,

“speculation”, and “gambling, for in the pursuit of financial gain, the gambler, investor

and speculator all take on risk, relying on different skill set, knowledge, intuition, or

simply relying on chance.

In their book “Security Analysis”, Graham and Dodd said gambling motives are

always at the heart of every investment. However, it is the official position of the New

York Stock Exchange that “gambling” (unintelligent speculation) represents the creation

of risks not previously existing, whereas, “intelligent speculation” applies to the taking of

risks that are implicit in a situation and so must be taken by someone.

A formal distinction between “intelligent” and “unintelligent” speculation boils down

to the taking of a risk that appears justified after carefully weighing the pros and cons as

intelligent speculation and risk taking without adequate study of the situation as

unintelligent speculation. Therefore, there are grounds for intelligent speculation through

sports betting, just as there are grounds for unintelligent speculations using traditional

investment instruments.

What distinguishes gambling from intelligent speculation therefore is not the financial

instrument used for the transaction but rather the careful use or lack of use of good

information to weigh the pros and cons of the transaction.

The holy grail of investment management is minimising risk as much as possible while

maximising expected returns in the process. Hence, investment management and

financial trading decisions revolve around what asset class and what combination

provides the opportunity for a better outcome.

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Investment management principles (such as the capital market theory) are based on

assumptions of relevant measures of risk for any asset and the relationship between (fixed

or uncertain) expected return and risk of any asset when markets are in equilibrium (i.e.

assuming away uncertainty).

While bookmakers have almost perfected the art of setting prices based on their

estimation of the true probability of a sporting outcome, the true probability cannot be

accurately quantified before the fact; not even the bookmakers know for sure exactly

what is going to happen, how it is going to happen and when it is going to happen.

Bookmakers are the option writers that know exactly how much risk exposure they

have for an expected return (premium) and the bettor (punters) are option holders that

know exactly the expected return for the risk exposure they are willing to take on.

The market prices attached to outcomes of sporting events (odds) are based not on

accurate calculations of true mathematical probabilities, but rather on the subjective

probability assessment of the market makers. Therefore, bookmakers’ opinion, analysis

and price attachment can be wrong.

The precise extent of the bookmaker’s wrongness is irrelevant, the skilled speculator´s

focus should be on new credible and valuable information that has not been adequately

accounted for by the price maker and has not been reflected in the market prices. This

gives the intelligent speculator an edge, which only need provide a more accurate

estimate of probability of an outcome than the market price reflects.

In August 2015, bookmakers priced Leicester City to win the English Premier League

at 5000:1 (0.02% chance of winning). 9 months later, the impossible happened, Leicester

city won, per The Telegraph, this cost British bookmakers £25 million, the biggest loss in

British history on a single sporting market.

Long Term Capital Management, a hedge fund launched in 1994 lost over $4 billion

despite having two Nobel Laureates in Economics Robert Merton and Myron Scholes,

(famous for the Black-Scholes model; a scientific method to understanding markets and

predicting their attributes), as their senior recipients.

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Operating on the scientific measure of future financial risk, the fund was very

successful for the first 3 years of operation, however in the 4th year, their own version of

Leicester city winning the EPL at 5000:1 happened.

The fund failed spectacularly, and lost $4.6Billion within the space of 4 months. The

near collapse of the financial system in the summer of 1998, thanks to the failure of the

high-profile hedge fund (LTCM) goes to show that future uncertainty cannot be known as

there are no clearly defined scientific rules to understanding markets and predicting their

(future) attributes. (Taleb. 2005).

Another high-profile example is the collapse of Iceland's three largest banks in 2008.

The banks; Kaupthing, Glitnir and Landsbankinn were 10 times the GDP of Iceland, 20

times the state budget. The collapse of the banks triggered the collapse of Iceland Stock

Market with 80% of the stock market wiped out overnight. (BBC. 2016).

The above examples are extreme wrong cases of implied probabilities of skill and luck

continuum activities in sports trading and investment management. Bookmakers rarely

get 5000:1 prices wrong; nonetheless, it goes to prove the existence of discrepancies

between implied probabilities and true probabilities.

The precise extent of the discrepancies cannot be known before hand, sometimes these

discrepancies are extreme 5000:1 discrepancies or implied probability mistakes of 4.6

billion dollars, and sometimes the mismatches are insignificant.

Eugene Fama said “there will always be new information that causes intrinsic values to

change over time and thus, people who can consistently predict the appearance of new

information and evaluate its effects on intrinsic values will usually make larger profits”

(Fox 2009).

What Fama failed to mention is that the factors that influence sporting outcomes and

price movements of securities have different levels of complexities and as a result, some

factors are observable and quantifiable more than others are. Just as some markets have

easier access to credible information and less prone to uncontrollable circumstances.

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Some markets and instruments are more predictable and provide better opportunities

for intelligent speculation. Especially markets built around easily measurable skill sets

and abilities than on markets built around complex macroeconomic activities.

Sports bets are European style option contracts linked to future sporting events while

traditional option contracts are bets that are linked to future microeconomic events, future

macroeconomic events or both. Foresights about future events arguably can be more

accurately derived on sporting related events due to fewer variables influencing the

outcomes compared macroeconomic level related events.

The outcome of sporting event between one’s local sports team is more predictable

than an event whose future outcome is tied to government policies, international trade

laws, unemployment rates and several trade regulations.

The efficient market hypothesis assumes current prices of securities reflect all available

information rationally and instantaneously; and are characterised in three forms;

(1) Weak form; assumes all relevant information from past events;

(2) Semi strong form: assumes all relevant public information as well as outcomes

from past events.

(3) Strong form, assumes some participants have access to (non-public) insider

information (Mallios. 2005).

While market manipulations are illegal on both the sports betting markets and

regulated financial markets, the use of non-public or insider information (strong form) is

legal on the sports betting market but illegal on most regulated financial markets. The

strong form epitomises the most rational decision making process, encouraging the use of

superior information.

Semi-strong efficiency points to sports betting market as providing opportunities for

better outcome. Sporting events have fewer variables than macroeconomic phenomena,

and available public information are easier assessable and more useful.

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Weak form efficiency, (which is rampant in sports betting transaction because majority

of participants engage in sports betting for entertainment) can still provide a better

outcome probability and fixed odds. For example, a blind bet on another goal in EPL

matches after 60th minute can still be profitable, as shown above.

Sports betting provide a better opportunity for intelligent speculation in the weak,

strong and semi strong form than its traditional options counterpart because sports betting

involve outcome-influencing factors that have abundant information which are easier to

observe and measure; height and weight of an athlete, athletic skill, physical abilities,

past performances. Etc.

Therefore, the world’s best tennis player is expected to win against an amateur tennis

player almost every time they play a game of tennis. Option contracts with traditional

assets as the underlying asset involves far many variables that could affect the outcome;

political, economic, managerial, competitive factors, and other unforeseeable variables.

Per Mark Cuban the billionaire owner of the Dallas mavericks “there really is far better

information about your local sports team than there is about any local business in your

market, there also is no such thing as insider information either. Reporters are there after

every practice to interview the players and coaches, they get to see and report on who is

there and who is not, who is limping and who is not”.

That is far more information than you get about companies whose stocks you are likely

to trade. Publicly traded companies do not disclose material information daily. They try

their very best to hide their actual performance when they are required to supposedly

disclose all information.

A major disadvantage is that sports bet holds no worth beyond the event to which it is

linked, which means contract expiry can be in a matter of minutes or seconds, with the

only possibility of monetary settlements. On the other hand, the same relates to the

millions, if not billions or trillions of option contracts, futures contracts and contracts for

difference traded globally on stocks, commodities and other assets every day that are

never converted into tangible assets upon expiry but merely monetarily settled.

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4 CONCLUSIONS

Although financial markets often try to distance themselves from gambling, the two

have far more in common that is usually thought. (Brenner, Brenner & Brown. 2008).

Finance and sports betting require decision making about future events whose occurrence

are linked to several observable, quantifiable and unquantifiable factors.

The attempt to seek financial gain from future events indicate that these events are not

completely chance dependent and the likely occurrence of these future events can be

estimated to various degree of accuracy despite the inherent uncertainty.

Although pricing a bond can largely be reduced to maths, valuing stocks and

subsequent derivatives are far more subjective. Wall Street (and academe) had devised

many a formula to forecast the market, but none, no matter how esoteric, had worked.

Over the short run, stocks are subject to the whim of often-emotional traders. Over the

long run, they vary with business performance, which is subject to great uncertainty and

is notoriously hard to forecast. It requires judgement, not merely maths. As economist

Burton Mailkiel once observed, God Almighty does not know the proper price-earnings

multiple for a common stock (Lowenstein. 2000).

Because there will always be people trading on superior information than others, there

will always be discrepancies in prices. The infamous Bernie Madoff once said every

aspect of a financial market is a person that is buying a share of stock is convinced they

know something that the other person who is selling it does not (Henriques. 2011).

As more flawed managed investments and financial market theories become

challenged, the rise of actively managed sports exclusive funds is inevitable.

Just like choosing to invest in a mutual fund in the stock market, investors and the public

can choose to invest their money in the hands of professional sports traders who are also

qualified, competent and accredited money managers.

As Bloomberg columnist Matthew Klein put it, “if I find a guy who is good at sports

betting and is willing to bet with my money in exchange for a fee, he is, for all intents

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and purposes a hedge fund manager. Rather than putting money into established asset

classes such as shares or commodities, investors now have the option of sports betting as

an alternative asset class (Kucharski. 2016).

When it comes to sports betting, there is often an intense blurring between intelligent

speculation and unintelligent speculation, which play into conditioning of associating

sports trading with gambling.

Investor confidence will be restored by performance of entity betting firms such as

Priomha Capital, and legislations such as in Nevada allowing regulated hedge fund-like

groups to accept out of state money from investors to use at any participating sports book.

(ABC News. 2016).

Priomha Capital is an example of this renaissance. Merging actively managed funds

with advanced sports analytics; they issue annual reports and a prospectus just like any

other hedge fund. It's CLONEY fund, a multi-sport investment fund that invests in

European Football, Cricket, Tennis, and Golf has gross returned +215.76% since its

inception on the 1st of January 2010 through to 31st August 2016.

During the same period, the benchmark ASX200 has returned approximately 10.77%,

The HFRX Global Hedge Fund Index has returned +2.25% and the FTSE100 has

returned +24.88%. (Priomha Capital, 2016).

When financial transactions are entered using good credible information with adequate

consideration to factors that determine outcomes of future events linked to the

transaction, such transactions are not gambling but rather intelligent speculation.

Following a simple strategy of wagering a fixed amount on a goal to be scored after

60th minute in an English Premier League match at odds of over 1.52 has proven to be

able to provide a decent return on investment over the last 16 years.

Sports betting are attractive alternatives to generate uncorrelated returns when

approached with a disciplined and ultra conservative risk management strategy. Hence,

sports betting should be considered an alternative asset class in its own right,

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21

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