What Coloradans Could Have Done with the Half a Billion Dollars They Just Blew on Sports Betting and Weed
By Jack Carter, Founder, Jack Carter Trading
The front page of the newspaper out here in Colorado this week really caught my attention…
It was on the very first page: On the left side there was an article talking about how much the Colorado economy was "stumbling." More people in Colorado filing for unemployment: 40,000 people, in fact, just in the month of November. The state government designated $436 million in CoVid relief to people who are apparently struggling to pay their bills.
People will be receiving $375 checks to pay for… I'm not sure what exactly. Look I get it: This has been one of the most challenging years anyone has seen in generations. But that amount of money won't even come close to covering rent for most people.
The Other Side of the Coin?
Right next to the story painting such a grim picture of the economy were two other headlines that seemed to tell a completely different story…
One headline said that Colorado has had its best year ever for marijuana sales - $1.8 billion, and that's not even counting the last two months of the year. In fact, Colorado had nearly $200 million in marijuana sales just in the month of October.
And then there was the other headline: Colorado registered $230 million in sports bets… just in the month of November.
I guess with the way this year has been, it shouldn't come as too much of a surprise that people are using vices to cope. But that's nearly half a billion dollars just in sports betting and weed! That's not even including cigarette and alcohol sales.
Like I said, I know there are people who need a hand right now. But I guarantee that some of the same people who will be getting a $375 check from the state of Colorado are some of the same people who have come up with the money for weed, booze, and gambling.
The good news is, at least these "vice" activities are being taxed and can help the state pay some bills. But just imagine if some of that cash had been put to work more profitably…
Do People Actually Make Money Sports Betting?
It is remarkable to me just how much sports betting has taken off in recent years. There are now more than a dozen states in the U.S. that have legalized sports betting. As anyone who watches or follows sports knows, it's almost impossible to escape hearing about it any time you turn a sports channel or read about an upcoming game.
I even hear play-by-play broadcasters talking about sports betting these days. Some even talk about their own fantasy teams and actual bets they have made. It's almost as if the whole system is geared towards gamblers rather than fans.
It's troubling for someone like me - and not just because I'm a purist who just likes watching the games and is against the commoditization of sports.
What's more troubling for me is how much money people are basically throwing away in sports betting. Independent research has found that it is very difficult for bettors to sustain profitability over the long term.
According to a survey of 1,200 bettors by Eilers Research, 70 percent of sports gamblers had broken even or lost money when all their bets from over the course of a year were totaled.
Things weren't so bad for the best of the best: According to a different study by McKinsey & Co., the top 1 percent of those who gamble on Major League Baseball paid 40% of total entry fees and made 91 percent of the profits. Meanwhile, the bettors in the bottom 80 percent paid about $50 on average in entry fees and lost half that cash.
I guess I can understand the people who say throwing some "action" on some games or setting a daily fantasy lineup with a platform. But for the people who are hoping to make a fortune - or even just sustainable income - on sports betting… you might as well just start buying lottery tickets.
A Better Way for Sustainable Income
I'm not exactly sure when or how sports betting got so mainstream. I guess maybe since we are so used to watching sports and knowing how much money professional athletes make, we decidedly collectively that hey, us spectators should be able to cash in on the action as well.
It may be just a fun hobby for some people, and that's perfectly fine. But if you or your spouse or a friend is sinking a lot of money into sports gambling, it's worth stating the obvious: Trying to turn a profit in sports betting is a losing proposition.
A much better way to generate steady income for yourself is to stay on top of what the broad markets are doing and understand which strategies are likely to bring you success. I like to help people succeed using strategies like covered calls, naked puts, iron condors, credit spreads, and even just straight up buying stocks.
If you can follow what's going on in the markets and know which strategies you should be using, you're going to have much more success compared with your average sports bettor.
The good news is, you don't have to get a job on Wall Street or pay an expensive analyst in order to know which strategy is most likely to succeed in certain market conditions.
I'm going to be spending a ton of time in 2021 on Strategy Selection.
Stay tuned...
Talk soon,
Jack
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