The Long Discussed Sports Betting Hedge Fund Comes to Pass

For years, Mark Cuban has discussed the prospect of starting up his own hedge fund dealing in the sports betting market, saying it would be easier than working the stock market. But restrictions on NBA owners being involved in gambling kept it from becoming a reality.

The idea might not have been feasible for Cuban, but that didn't stop someone else from running with it. Indeed, London-based investment company Centaur has established Galileo, the first regulated sports exchanged trading fund.

The company is already taking several cues from Cuban, as the language on the fund's site echoes many of the points made by the Mavericks owner, especially that there are many inefficiencies to exploit in the sports betting market, especially as it relates to emotion driving many of those involved.

Emotionally charged counterparties provide opportunity for low risk /high reward profit taking. Patriots and sport fans are rarely price sensitive and often lack investment discipline. Galileo operates unemotianally and clinically in these markets.

According to the fund's managing director Tony Woodhams, so far the number of investors is less than 20, each ponying up a minimum of $150,000. Within two years, he hopes to push the fund's total assets to more than $100 million. Upon its inception, the fund will bet on soccer, tennis, horse racing and golf. Within the next year, the NFL and baseball will be added.

The fund has promised not to wager more than five percent of its total assets on any single event. American investors won't be able to get in on the action until next year, but when that happens, Woodhams said they can expect a projected rate of return between 15 and 25 percent.

This post originally appeared on the Sporting Blog. For more, see The Sporting Blog Archives.