Sports Trading – The Ultimate Guide

Overview

Sports trading or sports betting has been around for centuries and for as long as sports have existed, providing people with additional excitement in betting on their favorite sports team or individual.

What is a bet?

A bet is a wager that a person takes that something will have a specific outcome, especially when they are not sure that it will happen. A bet can be made according to information that a person has about the situation, while other times the person can make a calculated guess.

Some examples of bets in everyday life include betting on the chance that it would rain, or that there would be traffic, and so on. Even though these types of bets are not monetized, they are perfect examples of how betting forms part of daily life.

Sports trading and betting involve the process of predicting sports results by placing a wager or bet on the outcome.

Origins and Early History

Sports betting can be traced to 2,000 years ago with the love of sports that the Greeks had, resulting in the creation of the Olympic Games, and various other athletic competitions that attracted wagers.

Sports betting was introduced to the Romans where it was accepted and legalized, becoming a popular factor in gladiator games where people would bet on the gladiator who would be victorious.

Even when these sporting events stopped, sports betting survived and subsequently spread across early Europe. In medieval times, some religious figures and leaders tried to outlaw sports betting because of its connection to gambling, which was considered a sin.

When laws were implemented to outlaw sports betting, it merely meant that these events moved underground, where it continued and grew undeterred as new sporting events were introduced.

Years later, gambling exploded and became popular in Europe when people started betting on horse racing events. This practice was spread to the rest of the world and the United States quickly adopted it.

Sports betting in the United States came to the forefront in 1876 when professional football was introduced. However, in 1877, it was realized that games could be thrown in the favor of some bettors, leading to several major scandals that cast dark shadows over the activity, some of which remain to the day.

Sports betting continued to grow, and as new sports were added, it resulted in the Golden Era of sports when collegiate football, as well as basketball, became sports betting favorites of many.

When the Great Depression, football pool cards became high in demand as it was an easy way to obtain quick cash for many. Up to this point in history, sports betting had not yet been legalized in the United States, but it was a widely accepted activity.

Nevada legalized gambling in 1931 but the rest of the United States would not follow this trend because of several factors, including the reputation that sports betting received because of the participation of the mob in the activity, resulting in the passing of the Wire Act in 1961.

For years Nevada, more specifically Las Vegas, was viewed as the one place where sports betting could be done legally. It was not until 1970 that sports betting saw an increase in popularity yet again when the US government lowered the 10% tax imposed on bookmakers.

After this, there were more US states that legalized sports betting, but the government worked ceaselessly to stop the proliferation of sports betting across all states in America.

This resulted in the passing of the Professional and Amateur Sports Protection Act of 1992 (PASPA). The act banned sports trading across the US except in the four states who already established legal operations.

There were severe impacts with the passing of PASPA that changed the sports trading landscape until it was overturned by the Supreme Court in 2018.

History in South Africa

Sports betting in Africa focuses on horse racing and football (soccer) more than any other sporting event. In Northern Africa, sports betting and horse races can be dated back to the 15^th century when the sport became popular in the Ottoman Empire’s Northern African territories.

The history of sports betting in soccer, more specifically, can be traced back over the past 70 years, as it is one of the most popular sports played across the African country.

Gambling in South Africa has seen various levels of legality throughout the history of the country. Horse racing was legalized in South Africa for the first time in 1965, followed by the introduction of casinos in the 1970s.

Because these casinos were in major cities and therefore inaccessible by many, it led to the establishment of more than 2,000 illegal casinos that were in operation by the mid-1990s. Following the new democratic government taking over in 1994, gambling was legalized across all forms in South Africa, albeit with some restrictions.

While South Africa experienced an influx of casinos, legal sports betting never received the required support in the country. This was attributed to the years of restrictions that prevented the development of an efficient market for sports betting.

Sports Trading Explained

When bettors participate in sports betting, they place wagers through a bookmaker or a sportsbook. The “book” refers to the books which are used by wage brokers to track various wages, pay-outs, and debts of bettors.

Many sportsbooks can be found online and they operate from different jurisdictions, allowing brokers to work around various gambling laws in certain markets. There are also many self-service kiosks around the world where bettors can place their wagers. However, these are not available in South Africa at present.

When there are certain sporting events that bettors are interested in, they place their wagers and pay the sportsbook before their bet is placed. One notable thing about sports betting, is that it has had its fair share of scandals that have involved point-shaving, spot-fixing, and overall match-fixing in several sporting events around the world.

Components Sports Trading

Sports betting is a very popular activity and people have been betting on different sports events, teams, individuals, and outcomes for centuries. One thing that makes sports betting so attractive, is that anyone can do it without prior knowledge or experience in trading or betting.

However, it does require some information and a basic understanding of how it works, the different betting strategies that there are, and a few other components, as opposed to it being a “guessing game” as many people would believe.

There are many sports better who are extremely methodological and strategic about their bets and to understand how sports betting can be done profitably, it is important to understand the different components that it consists of.

• Selection – which means that the bettor selects the sport that they want to bet on along with the team and/or individual. This can either be based on personal preference or according to the popularity of sports and teams.
• Stake – which refers to the capital that the bettor uses when they participate in sports betting.
• Odds – refer to the likelihood that something will occur, on which the bettor places their wager. Bettors can bet that a team would win a game, or they can bet on a team losing a game. Bettors can also go as far as betting on final scores, differences between scores, and so on.

Sports Trading Systems

Much like conventional trading strategies and systems, sports betting systems contain predefined rules and components that bettors use when they are participating in the activity. Betting strategies are divided into two main components namely:

• Negative progression systems
• Positive progression systems

Negative Progressions System

When bettors use these systems, they wage higher when losses occur, allowing them to try and make up for any losses that they experienced, ensuring that they can make some profits despite their losses.

However, an important consideration is that consecutive losses can become costly, and it can lead to financial ruin if bettors have limited capital. Some popular negative progressions systems are:

• Martingale
• D’Alembert
• Labouchere

Positive Progressions System

These systems are more appealing, and they involve bettors increasing their stake with every winning bet instead of increasing it with losing bets. When bettors experience loss, they do not try to make up for those losses. Typical systems that use this type of method include:

• Paroli
• Parlay

D’Alembert Betting Theory

This system involves slow and progressive betting where bettors try to reserve their capital while simultaneously making slow, consistent profits. The theory assumes there is a lack of balance, that if the bettor wins the same number of bets that they lose, they can choose their percentage of funds for every bet.

The amount chosen will purely rely on the bettor’s capital, but the percentage is typically between 1% and 5%, for example:

• If the bettor has R500.00 in their betting account, 1% of their first bet is R5 and if the bettor loses their first bet, they increase their bet to R10. Every time the bettor loses, they increase their base, ensuring that they can remain on track until they experience a win. With each bet they win, they decrease their bet by a unit.

Martingale Staking Plan

This system involves progressive betting, and it differs by requiring that the bettor double their stake when they lose instead of increasing their bet by small units. This is a risky system and is typically used by bettors who have more capital as it can pay off when the bettor has a winning streak.

Labouchere Betting System

This system divides the bet into smaller amounts and when the bettor loses, they will continue adding the wager until the end, for example:

• With a stake of R100.00, the bettor breaks it down into R10, R20, R50, and R20. When the first bet arrives, the winnings must be the first unit plus the last, which is double the R10 = R20.
• If the first bet is unsuccessful, the bettor eliminates R10 and moves on to R10.
• If they fail again, the bettor adds R20 to the last R10, which means that their wager becomes R30.

Paroli Formula

This is a popular algorithm that is used in sports betting, working according to the capital of the bettor. It typically uses 1-3%, which is the typical starting point. The principle surrounds the bettor doubling their stake once they win.

Once they reach a winning streak of three wins, they lower their bet to the base stake and they start over, repeating the process. If the bettor experiences a loss, they do not progress, and it means that they keep the base stake until they have a win.

Parlay System

Parlay is a common term that is used when referring to multiple wagers that are present in one wager. Parlay works to reinvest winnings from each bet and for this system to work, bettors must choose the winning team for each option selected, which makes the odds of success higher.

This will also increase the risks that bettors are exposed to, but it means that the bettor can earn larger returns and profits.

Fibonacci System

This system uses the Fibonacci system, and it allows the bettor to choose their unit, which is typically between 2-3%. While the conventional Fibonacci sequence starts with 0, the system typically starts with two 1s, which then look like this: 1, 1, 2, 3, 5, 8, 13.

On an R10 unit size, the Fibonacci sequence will indicate how to bet. If the bettor’s first bet is R10 and they lose, their second bet will be R10. If the bettor experiences another loss, their third bet will be two units, or R20. If they lose after this, they move back down to R10, and so on.

Unit System

This is an effective fund management system that uses designated values ranging between 1 and 10. Bets for the value of 10 are used for the bettor’s longshot, with rare wagers indicating value, while 1 is reserved for certified, ‘sure thing’ bets, where the term refers to a certain percentage of the bettors’ wallet.

Important Terms

• Favorite – refers to a team or individual that the bookmakers believe will win and by how much. Bookmakers indicate this with a (-) on the board. When bettors bet that the favourite will win, they typically receive less because the team or individual was already selected as the most likely to win.
• Underdog – is the team, competitor, or sportsbook which is considered the less likely to win according to the bookmakers. Bookmakers indicate the underdog with a (+) on the board. When bettors bet that the underdog will win, and they do, they receive lucrative returns because the odds are against the underdog.
• Side – every bet has two sides, and each side has a corresponding number assigned to it by bookmakers, and these three sides exist in all three basic bet types.
• Line – is the numbers that correspond with a specific bet and can include the full game or a specific time interval.

Types of Bets

Money line

This refers to a bet for a team or a competitor to win an event, game, or contest. If two teams are participating in a soccer match and the bettor believes that Manchester will beat Liverpool, they can subsequently bet on Manchester.

The bettor accesses their online sports trading website or app, and they see +225 next to Manchester and -286 against Liverpool. This means that Liverpool is the bookmaker’s favourite to win while Manchester is the underdog.

If the bettor bets R100 on Manchester, they will win R225 because Manchester is considered unlikely to win. However, to win R100 on Liverpool, the bettor must wager R286.

Spread

When bettors participate in spread bets, they will bet on the team to win over a specific number of points, or they could bet that the team would lose by a certain number of points. Bookmakers typically determine these points before the game, for example:

• The bettor wants to bet on Manchester, but they are not sure whether the team will win, and they anticipate a close game between the two teams.
• The bettor sees +225/+9 -110 for Manchester, where +225 is the money line and +9 is the spread, with -110 referring to the odds associated with the spread.
• If the bettor anticipates that Liverpool will lose by less than 9 points, or that they will win the game, bettors in their bet at -110, which means that to win R100, the better must bet R110.
• If the bettor bets Liverpool at -9 -110, it means that Liverpool must win the game by more than 9 points for the bettor to experience a win.

Total

This is the over/under the number that completes the money line and if the bettor sees Manchester +225/+9 -110/75.5, the 75.5 represents the number set by the bookmakers and it is the combined score of both teams. To win the over bet, Manchester and Liverpool must have a combined score of more than 75.5 points.

To win the under bet, the teams must score less than the combined 75.5 points, with the typical odds on this bet -110, subject to change.

Pros and Cons of Sports Trading

Tips for Sports Trading

Start Slowly

Sports betting is an activity that is easy and simple to understand, but it involves some money and risk management as it is highly competitive, and bookmakers have years’ of experience and extensive knowledge of spread betting, which gives them a competitive edge.

By starting slow, and learning about what sports betting involves, bettors, can stretch their capital while making small profits and building experience in the activity. By taking it slowly, bettors can make informed decisions and avoid emotional bets.

Have realistic expectations

Sports betting can result in great profits, but it is not a get-rich-quick scheme. It requires consistent participation and effective money management. Some professional sports bettors have careers in sports trading, and it requires patience, dedication, and higher risk tolerance.

Bet with a clear mind

Bettors need to keep their emotions in check and remember to never make bets under the influence of alcohol or drugs. In addition, bettors should not base their decisions on the opinions of others without conducting their research.

FAQ

Is online sports trading legal in South Africa?

Yes, sports trading is a legal activity in South Africa, given that bettors follow the law when they use the services of betting providers.

Are sports betting markets efficient and liquid?

Yes, because of the sheer interest in sports, these markets are liquid, but they are not always efficient. These markets are also subjected to various conditions such as weather, injuries, the opinions of bettors, and other factors.

Why do individuals engage in sports betting?

Most engage because it is a form of entertainment while others make an income from it.

Can you make money from sports betting?

Yes, but this will depend on certain factors. There is no guarantee or sure way for consistent profits to be made.

How can I sport a sports betting scam?

By considering the domain name, unrealistic promises of guaranteed profits, and any other red flags relating to the website and the provider.

Are winnings taxable in South Africa?

South African sports bettors are not subjected to tax on winnings in South Africa. However, their winnings may be subjected to tax depending on where the betting service provider is located as some regions charge capital gains taxes on winnings.