Sports gambling is taking a cue from Wall Street, and it could be a problem for sportsbooks
- This post originally appeared in the Insider Today newsletter.
Happy Friday! Dust off that old digital camera for any weekend plans you have. You'll impress the Gen Zer in your life.
In today's big story, we're looking at how a sports bettor trying to hedge a $1.7 million payout shows the gambling world is taking a page out of Wall Street's book.
What's on deck:
- Markets: A boring but promising way to bet on AI in the stock market.
- Tech: Silicon Valley's tech workers are coming to New York for the vibes.
- Business: YouTube insiders describe how it plans to compete with Spotify and Apple.
But first, let's make a wager.
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The big story
Sports gambling goes Wall Street
How would you like to turn $100 into $1.7 million in a little over a year?
Wayne Shelton has a shot at generating the type of return hedge funds and VCs could only dream of. (It's 1,699,900% if you were wondering.)
A three-leg futures bet Shelton placed in May 2023 on the MLB, NFL, and NBA championship winners is one win away from the life-changing payout.
But Shelton might not need the last leg of his bet — the Oklahoma City Thunder winning the NBA title — to see some cash, writes Business Insider's Matthew Fox. Thanks to a secondary market for gambling tickets, Shelton could sell his ticket to another bettor.
WagerWire, one such market, valued Shelton's ticket at $228,613 after the Thunder beat the Dallas Mavericks in the first game of the Western Conference semifinals, according to ESPN.
The value of the ticket is expected to continue to grow if the Thunder advance to the conference finals ($330,366) and the NBA finals ($720,420).
(DraftKings also offered Shelton a cashout, but only at about $75,000.)
It's worth noting Shelton is still up against some considerable odds.
Sportsbooks have the Boston Celtics as a heavy favorite to win the NBA title. And if the Thunder advance to the next round, they'll likely face the Minnesota Timberwolves and Anthony Edwards, widely considered the new face of the NBA.
Futures? Secondary market? Hedging? It's giving Wall Street. (Did I use that right?)
To be fair, you could make the case the two have always looked the same. Multi-leg and same-game parlays aren't really different from out-of-the-money and zero-day options.
And not unlike Wall Street's feelings about retail traders, Shelton is the type of gambler sportsbooks love. A $1.7 million potential payout is nothing compared to the advertising they're getting from his story.
How many people, inspired by Shelton's longshot bet, will cook up their own parlay? And of those bets, how many are likely to win? There's a reason they say the house always wins.
Professional bettors, though, are another story. Unlike mom-and-pop gamblers who often bet on a whim, so-called sharps' systematic approach to gambling can pose a problem for sportsbooks.
And the rise of a secondary market to hedge one's risk is another tool these bettors can leverage to gain an edge on sportsbooks.
That might sound impossible, but so did developing successful betting systems for horse racing and roulette… until professional gamblers did it.
In the meantime, we're compiling our first-ever list of rising stars in the US sports-betting industry. More details here.
3 things in markets
- The under-the-radar industry set to boom from AI. Utility stocks aren't the most exciting part of the market, but they're well positioned with the rise of AI, according to Goldman Sachs. Data centers, another key behind-the-scenes player in the AI ecosystem, have significant electricity demands.
- China is pulling a Russia regarding its place in the global economy. The world's second-largest economy is relying less on the West, producing more semiconductor chips and batteries, and reducing food imports. It could be in preparation for long-term geopolitical tension, experts told BI.
- Sam Bankman-Fried has a new currency to trade in prison. The disgraced former FTX CEO told Puck that his rice has become a medium of exchange in Brooklyn's Metropolitan Detention Center. SBF also said he hadn't done anything wrong and plans to appeal his conviction, in his first in-person interview from MDC.
3 things in tech
- Sundar Pichai explains Google's layoff strategy. The company has gone through several rounds of cuts this year, and Pichai says it's intentional. Rather than laying off employees in one fell swoop, Pichai told Bloomberg the company is "taking the time to do it correctly and well."
- The tech man cometh. Young tech workers are heading to New York City for the ambiance and the dating scene, and they don't mind paying more for it. Despite high rents, New York attracted the most tech talent from the Bay Area in 2022-2023.
- Jack Dorsey speaks out. The Twitter cofounder helped launch alternative social media platform Bluesky, but revealed in a posting frenzy on X earlier this month that he'd left the company's board. In an interview with Mike Solana, Dorsey said he quit because Bluesky was "literally repeating all the mistakes [Twitter] made as a company."
3 things in business
- YouTube has a plan to compete with Spotify and Apple in podcasting. As video podcasts boom on YouTube, the platform is leaning on its ability to offer both video and audio to draw in listeners. Two employees detailed the strategy at an event in April.
- A failed video game cost Warner Brothers $200 million. The company took a staggering loss on "Suicide Squad: Kill the Justice League," which came out in February. It raises the question of whether big media companies should get into games at all.
- Best of frenemies. Google's Demis Hassabis and Microsoft's Mustafa Suleyman first met in London when the latter was still at school. By 2010, they'd founded DeepMind together — but now they're on opposite sides of an AI arms race fought between Big Tech's oldest rivals.
In other news
- Stormy Daniels gives hush-money jury a tutorial in porn: 'The sex is very real — just like the sex in that room.'
- Joe Biden is expected to unveil new tariffs on Chinese EVs. Here's what that could mean for the sector.
- 'Seriously underwater' mortgages are on the rise throughout the US, with Southern states seeing the biggest jump.
- Apple pulls iPad ad that it says 'missed the mark'.
What's happening today
- Today's earnings: Honda is among the companies reporting.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London.