Sports betting as a new asset class—current market organization and options for development

Gomber, Peter; Rohr, Peter; Schweickert, Uwe

doi:10.1007/s11408-008-0077-7

Cited by 4 publications

(3 citation statements)

References 26 publications

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“…For example, hedging demand may divert funds from financial markets to racetracks because the outcome of horse races are idiosyncratic and independent of the state of economy. As Gomber et al (2008) note, strategic gambling generates an "orthogonal risk factor" that is critical for improved portfolio diversification; evidence suggests that investors rely on intermediaries such as betting syndicates and esoteric hedge funds in pursuit of uncorrelated payouts at the racetracks. Kaplan (2002) notes that since the 1980s, racing industry has witnessed significant proliferation of such intermediaries, generating large flow of funds into horse wagering.…”

Section: Jes 512mentioning

confidence: 99%

Business cycles, stock market wealth, and gambling at the racetracks

Ramezani

Ahern

2023

JES

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PurposeAs digital technologies expand access to new forms of legalized gambling, including sports betting and online gaming, it is important to assess the impact of macroeconomic and equity market outcomes on fund flows into gambling. The authors’ findings will be of interest to policymakers and the gambling industry, as various forms of gambling, including day trading, gain broad public acceptance.Design/methodology/approachThe authors examine the impact of macroeconomic forces, business cycles, and financial market wealth on gambling. The authors propose a nonlinear model linking aggregate gambling expenditures to macroeconomic, stock market, and gambling industry variables. The authors estimate the proposed model using nonlinear estimation procedures.FindingsThe authors find that price of wagering, incomes, and supply of gambling opportunities are the primary determinants of wagering demand. Aggregate wagering is negatively impacted by realized stock returns and market volatility, but rises during recessions.Originality/valueTo the best of the authors’ knowledge, the questions posed and addressed in this manuscript have not been addressed in prior literature.

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Section: Jes 512mentioning

confidence: 99%

Business cycles, stock market wealth, and gambling at the racetracks

Ramezani

Ahern

2023

JES

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“…Betting exchanges are starting to innovate their business models by adapting the fundamental elements of bookmakers. As an additional service, they offer bets for fixed quotes and act as intermediaries like bookmakers (Gomber et al, 2008;Flepp et al, 2014). The ongoing hybridization in the betting industry, therefore, implies that different elements of the two underlying business models are combined and in this way create a new hybrid business model.…”

Section: The Betting Industry and Paddy Power Betfairmentioning

confidence: 99%

Managing digital transformation through hybrid business models

Endres

Stoiber

Wenzl

2019

JBS

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Purpose This paper aims to examine how hybrid business models can help companies to survive in a constantly evolving digital world. The hybridization of business models is a promising approach to innovation. Design/methodology/approach The authors discuss the key elements of a successful business model hybridization along the Business Model Canvas (Osterwalder and Pigneur, 2010). In particular, the elements of value propositions, customer segments, channels and a company’s cost structures demonstrate the individual steps toward a hybridized business model. Using Paddy Power Betfair as an example, the authors showcase how the concept of a hybrid business model can be successfully implemented in practice. Findings By hybridizing its business model, Betfair not only expanded existing customer value propositions but also introduced new ways of co-creating value with customers. Simultaneously, the hybridization positively affects a company’s revenue model, hence evolving in new ways of capturing value. Originality/value To effectively hybridize and thus innovate a company’s business model, the two key factors are successful value creation and value capture. By hybridizing elements of existing business models, new value for customers can be generated. Companies capturing this additional value may achieve sustainable and successful business models and thereby gain a competitive advantage.

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“…Moreover, even rational riskaverse investors may gamble at the racetracks, because the horse race payouts are plausibly independent of aggregate risk preferences and changing risk premia in the financial markets as a whole. For example, Gomber et al (2008) show that strategic gambling can generate an "orthogonal risk factor" that is critical for improved portfolio diversification. Evidence suggests that investors rely on intermediaries such as betting syndicates and esoteric hedge funds in pursuit of uncorrelated payouts at the racetracks.…”

Section: Introductionmentioning

confidence: 99%

How Do Financial Market Outcomes Affect Gambling?

Ramezani

Ahern

2023

JRFM

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A large literature in behavioral finance explores how gambling sentiments influences trading in stocks. This paper considers the reverse phenomena; the impact of financial market outcomes on aggregate gambling expenditures. We expect the wealth effect of higher realized stock returns will increase gambling (entertainment good). Similarly, we expect rising volatility will attract gamblers to equity markets seeking thrill and skewed payouts. Utilizing novel horse wagering data (1934–2020), we study the impact of these forces on gambling expenditures. Using corporate bond spreads as a proxy for business cycles, we find that, in addition to financial market outcomes, price of wagering, incomes, and availability of competing betting products are important drivers of gambling. We also find that, ceteris paribus, gambling rises during recessions. Our findings will be of interest to policy makers and the finance industry, particularly as day trading, sports betting, online casinos, and other gambling gains broad public acceptance.

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Sports betting as a new asset class—current market organization and options for development

Abstract: Sports betting, Regulated market, CCP clearing, Inter-bookmaker platform, Market microstructure, G10, D40, D51,

Cited by 4 publications

References 26 publications

Business cycles, stock market wealth, and gambling at the racetracks

Business cycles, stock market wealth, and gambling at the racetracks

Managing digital transformation through hybrid business models

How Do Financial Market Outcomes Affect Gambling?

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