Sports bettors wager on stocks
With games on pause, some new investors get ‘same rush’ in market
When he wasn’t coaching sports, he was playing them or watching them. And if he was watching — well, a little skin in the game always made it more interesting for Steven Young, a teacher outside Philadelphia. Just small-dollar bets, mixed in with shuffling the rosters of his fantasy teams.
But when the coronavirus pandemic hit, all the games he cared about sputtered to a stop. So he turned to one of the last places in town for reliable action: the stock market.
Young withdrew all the money from his sportsbook accounts and deposited it into Robinhood, the free stock-trading platform. When his federal stimulus check arrived, he put money from that in, too.
Forced into online lessons when his school district shut its doors, the health and physical education teacher had everything he needed to get into the market. “Having the time and the flexibility and the opportunity — it being as low as it was — I just kind of felt it was a good time,” he said.
Young, 30, has about $2,500 invested, making him a guppy among whales.
But some Wall Street analysts see people who used to bet on sports as playing a big role in the market’s recent surge, which has largely erased its losses for the year.
Millions of small-time investors have opened trading accounts in recent months, a flood of new buyers unlike anything the market had seen in years, just as lockdown orders halted entire sectors of the economy and sent unemployment soaring.
Stymied sports bettors are sitting on a substantial amount of money.
Gamblers legally wagered more than $13 billion on sports last year, according to Eilers & Krejcik Gaming, a research and consulting firm, and estimates suggest illegal wagering is 10 times that figure.
But betting has collapsed since the outbreak shut down the major sports leagues.
Sports betting revenues in March dropped some 60% from February, the firm said. They may have fallen as much as 80% more in April.
“Basically, I needed something to try to gamble on or to try to make some money on,” said Sean Moore, a 23-year-old aircraft electrician living in Suisun City, California.
With an initial investment of about $1,000, he has experienced all the highs and lows of playing the market in just a few weeks.
Moore’s bets on airlines and casino companies surged roughly 60% in about a week.
But then a bet he made on casino company MGM — premised on the reopening of Las Vegas after coronavirus restrictions were lifted — went south.
“It did not go positive like I thought it would,” he said. “I thought that was going to be huge with them reopening.”
Moore got into stock trading after watching Dave Portnoy, the president of the raunchy, irreverently juvenile — and wildly popular — sports and gambling website Barstool Sports.
When the coronavirus shuttered Barstool’s Manhattan offices, Portnoy — who had almost no stock trading experience — reinvented himself as “Davey Day Trader.” With an initial outlay of $3 million, he started buying and selling from his apartment and streaming the results to his loyal readers.
It didn’t start out so well: Portnoy lost more than $1.5 million on repeated bets that the market would fall. He put in more than $2 million more and turned into a raging stock market bull, clawing his way back to positive territory.
The short-term swings make betting on stocks no different from betting on a game: “Same rush,” he said.