Overlap between analyzing financial markets and sports betting

[brettd]

Has anyone ever had any sort of cross-disciplinary inspiration into looking at sports betting from methodologies adopted from financial markets, or vice versa?

I'm intrigued whether such things the Black-Scholes options pricing model has any sort of overlapping value in sports betting also. Or even vice-versa. Do those individuals that have extensive backgrounds in sports handicapping methodologies have angles that financial analysts just wouldn't think about?

I'm just generally fascinated by the prospect of a transferability in knowledge and methodologies that are intended for use in one type of market, but may also have value looking at the other.

[bztips]

Partial answer -- yes, there is lots of overlap, for example the Kelly criterion is used all the time in both stock trading and sports betting.
But there are also many differences, for example in sports betting you will never have tsunami's like the financial meltdown of 2008 since sporting events are (for the most part) really independent, unlike financial markets.

[CHUBNUT]

talking of Tsunami's its very unlikely you have the same phyics going on in an Ocean and a tidepool. Lets see, comparing The dow jones and tonights market for the mets game.

[Bluehorseshoe]

You mean a way of "Conquering Risk"?

[MonkeyF0cker]

The basic theory behind Black-Scholes can be applied to derivative markets in sports wagering. However, it requires an efficient, arbitrage-free price on the underlying "asset" or full game spread.

[Inspirited]

do you think that the major sports markets more generally conform to the EMH?

[evo34]

do you think that the major sports markets more generally conform to the EMH?

Not even remotely close. The prices of sports outcomes and stocks are influenced by human behavior. As such, there is no way either market can become efficient (unbeatable). If you are smarter than the money-weighted average market participant (by enough to overcome costs), you will win.

[That Foreign Guy]

do you think that the major sports markets more generally conform to the EMH?

I think most major sports markets consensus prices are generally close to semi-strong form efficiency. I don't think even financial markets meet strict strong-form efficiency.