Sports betting: the new niche for quants at Susquehanna
High frequency trading as an industry has always ebbed towards new asset classes and strategies. Susquehanna International Group (SIG) is doing it again by building a team focused on quantitative sports betting, and it's not alone.
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The Financial Times reported today that SIG is building a sports-betting team, run by Doug Yass, son of founder Jeff Yass. The team has four openings across its European HQ in Dublin and its global HQ in Pennsylvania. The firm has been operating in the space since 2017 under the obscure name, Nellie Analytics.
In a 2021 podcast, Yass said Nellie focuses "mostly on in-game wagering", although recent job listings also suggest that the team is involved in pre-game wagers now. As of 2021, Nellie Analytics had 30 employees, evenly split across traders, quants and developers.
Nellie has been hiring recently, but mostly at graduate level. We've seen ~15 people join the team since the podcast, including quant researcher Irwin Deng, formerly a machine learning engineering intern at Playstation, who joined in August.
Other electronic trading firms have dipped their toes in the space, including Jane Street. It hired Shane Huang in Australia last August, a former Optiver intern who is also a YouTuber focused on making sports betting content. Multiple major firms who've built teams in the space have eventually shuttered them, however.
A senior quant headhunter in London says quantitative sports-betting teams tend to be "pod-like specialized teams" of around 5-15 people. James Drysdale, founder of boutique search firm Winston Fox, says you're more likely to find larger teams at a number of specialized firms in the space, such as Smarkets and Starlizard. The most recent Companies House accounts for each firm showed they employed 140 people and 242 people, respectively.
The sports betting industry is far more developed in Europe than the US. Online sports betting only became legal in New York in 2022, and 12 states still prohibit it entirely.
What do sports quants do? They're focused on "searching for pricing inefficiency and alpha that may not be priced into the market," says one headhunter. You'll be applying all the usual quant techniques to different datasets in sports betting. Drysdale says you'll use probability, statistics and machine learning but on data like "team stats, injury reports, weather, coaching, etc."
This can involve watching a lot of tape; Yass said in the podcast that he was watching "40 hours of golf a week" as part of the role.
If sports betting is a field you're particularly passionate about, this all sounds like great news... but there's a catch. The headhunter said that while a quant in a more established field like futures or options "could transition into sports betting, it's unlikely to work the other way around." If you go into sports betting, chances are you "would struggle to get out of it."
If you're a sports loving quant but don't want to commit to that field, you may want to work at hedge fund Point72. It allows its quants to work on data analysis and technology for the New York Mets, a baseball team owned by Point72 founder Steve Cohen.
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