A sports bettor trying to hedge a $1.7 million payout shows the gambling world is taking a page out of Wall Street's book.
Happy Friday! Dust off that old digital camera for any weekend plans you have. You'll impress the Gen Zer in your life.
In today's big story, we're looking at how a sports bettor trying to hedge a $1.7 million payout shows the gambling world is taking a page out of Wall Street's book.
What's on deck:
But first, let's make a wager.
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How would you like to turn $100 into $1.7 million in a little over a year?
Wayne Shelton has a shot at generating the type of return hedge funds and VCs could only dream of. (It's 1,699,900% if you were wondering.)
A three-leg futures bet Shelton placed in May 2023 on the MLB, NFL, and NBA championship winners is one win away from the life-changing payout.
But Shelton might not need the last leg of his bet — the Oklahoma City Thunder winning the NBA title — to see some cash, writes Business Insider's Matthew Fox. Thanks to a secondary market for gambling tickets, Shelton could sell his ticket to another bettor.
WagerWire, one such market, valued Shelton's ticket at $228,613 after the Thunder beat the Dallas Mavericks in the first game of the Western Conference semifinals, according to ESPN.
The value of the ticket is expected to continue to grow if the Thunder advance to the conference finals ($330,366) and the NBA finals ($720,420).
(DraftKings also offered Shelton a cashout, but only at about $75,000.)
It's worth noting Shelton is still up against some considerable odds.
Sportsbooks have the Boston Celtics as a heavy favorite to win the NBA title. And if the Thunder advance to the next round, they'll likely face the Minnesota Timberwolves and Anthony Edwards, widely considered the new face of the NBA.
Futures? Secondary market? Hedging? It's giving Wall Street. (Did I use that right?)
To be fair, you could make the case the two have always looked the same. Multi-leg and same-game parlays aren't really different from out-of-the-money and zero-day options.
And not unlike Wall Street's feelings about retail traders, Shelton is the type of gambler sportsbooks love. A $1.7 million potential payout is nothing compared to the advertising they're getting from his story.
How many people, inspired by Shelton's longshot bet, will cook up their own parlay? And of those bets, how many are likely to win? There's a reason they say the house always wins.
Professional bettors, though, are another story. Unlike mom-and-pop gamblers who often bet on a whim, so-called sharps' systematic approach to gambling can pose a problem for sportsbooks.
And the rise of a secondary market to hedge one's risk is another tool these bettors can leverage to gain an edge on sportsbooks.
That might sound impossible, but so did developing successful betting systems for horse racing and roulette… until professional gamblers did it.
In the meantime, we're compiling our first-ever list of rising stars in the US sports-betting industry. More details here.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London.