Are quant trading firms too snobby to admit they're building in sports betting?
In October, we reported that electronic trading firm Susquehanna International Group (SIG) was building out its quantitative sports-betting team. Other major players are going into the field, while others are pulling out... but everyone is remaining secretive.
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One unnamed major electronic trading firm, which multiple recruiters claimed had a quantitative sports-betting team, denied its existence. Tower Research Capital, which did not respond to a request for comment, was thought to have shut a sports trading team down. Jump Trading was also rumored to have shuttered a sports-betting team, but it appears to remain in operation.
Quant hedge fund AQR, meanwhile, put out a job listing this month for a quantitative sports research intern. It's the first such internship at the firm and will involve "seek[ing] out reliable sports data to clean, analyze, and transform into algorithms and trading strategies." The fund doesn't actually incorporate sports betting into its trading strategies, however, and instead uses sports analysis to inform its theories and research in other markets.
Why all the confusion surrounding these roles? One senior quant recruiter says there's a taboo "grey mark" around quant sports trading that means it is "seen as lesser" to traditional asset classes.
"There's always a bit of snobbery in finance," the recruiter said. "Moving into quant sports betting isn't great reputationally." He says this sentiment insists upon itself, as the field tends to "attract a slightly lower candidate."
It's not all snobbery, however. Upper echelon quants don't often go into sports betting because there are "so many factors that can affect the outcome" of a match and, if your prediction is wrong, you can lose everything. Standard asset classes provide more opportunity to cut your losses and have more regulation.
This is also why big funds who do have the teams aren't so vocal about them; the recruiter says it "would be a massive struggle to try and convince investors when your strategy is based on sports betting." SIG seems to be the exception, but its sports team was founded by the son of Jeff Yass, SIG's founder, which might have swayed the odds in favor of its survival.
Things may soon change, however, thanks to firms like Polymarket and Robinhood.
Polymarket rose to prominence during the 2024 presidential election as millions of people used it to bet on the outcome of the vote. The startup provides event contracts, a blockchain-based asset whose value represents the likelihood of a future outcome. It already does event contracts for sports, while Robinhood CEO Vlad Tenev said that the brokerage was interested in entering the sports betting space using event contracts too. Time will tell if these assets prove more attractive to the major firms.
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