Five Reasons Sports Betting Will Continue To Thrive

OBI TRICE EMEKA

I estimate that one in every three people reading this has placed bets on various sporting events this weekend and is willing to place more. This might be an exaggeration, but it shows how widespread the sports betting culture is. Sports betting earnings have become a source of hope for many to fund their dreams and aspirations, especially in countries like Nigeria where taking loans is challenging.

Humans have always recognized the role of chance in life, and this has fueled the gambling culture, which is as old as humanity. Think about it, everything in life is up to chance and only a few events in life are certain. The earliest evidence of humans predicting the possibility of an event for a reward dates back to around 3000 BCE in the Kingdom of Ur, now in today’s Iran, where men gambled using a dice-like object called Astragali. However, it was in Ancient Greece and Rome that gambling became notorious, with stakes taken on gladiatorial fights, animal contests, and chariot races.

The Science of Sports Betting

Every event in life is subject to chance, and those who understand this have kept making money from it. If I ask you to guess if it will rain today for a cash reward if your guess turns out right, would you take it? My guess is, why not, since there is a reward for it? If I modify my offer and ask you to pay a fee to make that guess, with a reward larger than the fee, would you still take it? My guess is still why not.

Humans have always made money from making correct guesses, leading to an interest in the study of chance by the 15th century. The study of chance is known as probability, which is a measure of the possibility that an event will occur. Mathematically, probability is expressed as a function of the possible number of outcomes over the total number of outcomes. Probability is expressed either as a fraction or percentage and ranges from zero to 1. An event that returns 1 is certain to occur.

For example, Assuming that there are 8 balls in a bowl with two blue colours, and 3 yellow and 3 white coloured balls in the bowl, the probability of picking a blue is 1:4, or 25%,  meaning that in every four attempts the probability of picking a blue ball is once

The understanding of probability has given rise to various commercial gambling endeavours such as sports betting, where for a fee, you are offered a large reward for predicting the probability of an event occurring during a sporting game. Odds in sports betting express the probability of that event occurring and are calculated using previous experiences as they relate to that event alongside existing conditions. The lesser the odds, the likelihood that the event will occur.

Promoters of Sports betting understand that humans love such excitement and that probability is more of randomness than it is skill, hence, know that the probability of winning is always lower. In sports betting just like in Insurance, funds are pooled by different punters who take a chance and a small percentage from that pool is distributed to the few who win- the belief by punters that they will win one day keeps pushing punters to supply to the pool leaving the promoters with a heavy volume of cash flow and profit.

Here are five reasons why sports betting will continue to thrive:

1.  Financial Gains Drives Human Behaviour

Sports betting in Europe was valued at $33.7 billion in 2023 and is expected to grow to $65.54 billion in 2030 with a CAGR of 9.9%. Humans thrive on searching out economic values and seeking personal benefits; hence, any human activity that increases economic value will always get attention. The attraction to financial gain through sports betting will continue to make betting and gambling attractive.

I often think that we are so deep into our skewed pursuit of morality that we forget to see humans for what they are- just like other animals, all humans aim to survive and sports betting to those who indulge in it is just another means to survive. Humans will take profit from anything that appears profitable – moral suasion collapses in the face of economic opportunities or personal gains. I often joke that capitalism is the very essence of human existence, and for this reason, communalism failed, and communalist states such as China and Russia  had to  revert to capitalism

It is for this reason that I believe that the attraction for financial gain through sports betting will continue to make betting and gambling attractive. If the government decides to make it illegal today, black markets for sports betting will spring up everywhere. The search for financial gains is natural, and for this reason, sports betting will continue to thrive

2 . Survivorship Bias Will Keep Fuelling the Need for Sports Betting

Many of us underestimate the role of luck in our lives, and many have come to see luck as a skill set that came naturally. On social media, I have seen many profiles marketing their expertise in sports betting predictions. Riled by social media show-offs or exaggerated marketing by sports betting promoters, many of us rush to place a bet on sports betting sites because all we see are the survivors and not the losers. This phenomenon is known as survivorship bias. Survivorship bias allows you to see only those who win from sports bets. Winners are often very vociferous, and losers love to lick their wounds in silence. Hence, the noise of the few winners envelopes the silence of the multitude of losers. This phenomenon is known as survivorship bias. Survivorship bias allows you to see only those who win from sports bets.

A few years ago when I experimented with sports bet, the only motivation to place a bet was to hear that someone I know has won a bet. This is survivorship bias- we seek only the story of the winners and are biased toward them and refer to them as experts even when it was just randomness making a pick out of thousands of people.

3. Sports Betting as a Source of Passive Income

Sometime last year, I was taking an evening stroll in my estate, as I approached this house that I would say is the most aesthetically beautiful, I heard the owner who sat on a rooftop overhang in the mansion speaking to a friend of his the phone about how his sports betting prediction was rendered useless by an English Premier League Team that weekend.

I shuddered and wondered why an accountant who has everything going for him should engage in sports betting. Then, I realised that everyone is in search of a passive income to augment their income. I also have this cousin who defends his attraction to sports betting with the sophistry that he is only trying to maximise income to fund some expenditures he doesn’t want to be captured from his income. Anyway, he always lost more money than his anticipated expenditure.

We love to seek justification for behaviours that our conscience might not accept, and for those into sports betting, passive income is a willing alibi.

4. Rising Inflation and the Need to Raise Income

Inflation is the enemy of money, as money will always lose value. Most often, income growth rarely matches up to inflation and keeps up with rising inflation. Many see sports betting as a means to earn more income in a global world where inflation is the enemy.

5. Risk Taking for Reward is a Natural Human Instinct

I have always opined that we often ignore the human connection to risk-taking. Think for a minute about how humans got to this stage of development. It is risk-taking. Once there is a reward, humans will dive in. One sports betting site in Nigeria goes with the slogan, “Reward for passion.” If I am to paraphrase, I will call sports betting the reward for risk-taking. No matter what you think of sports betting, human psychology supports and will continue to support sports betting. Humans love to take risks for a reward. Think about it, despite continuous asset bubbles, humans continue to invest in risky assets, and sports betting will not be different. The human adrenaline loves risk-taking, and it is made better when there’s a reward for it.

– Chukwuemeka Obi is a graduate of Agricultural Engineering and also has an M.Eng in Processing and Storage from the University of Ibadan. Though an engineer, he is a profound attraction to investment and finance. In this pursuit, he took a course on the Financial Market offered by the University of Yale and taught by Robert Shiller a 2013 co-winner of the Nobel Prize in Economics. He has also taken different courses on the financial market and has a robust investment portfolio cut across different financial markets and instruments.