My New Hedge Fund

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I’ve decided to start a new hedge fund. However, this hedge fund won’t invest in stocks or bonds, or any type of
business. It’s going to be a fund that only places bets. A gambling hedge fund.

It won’t be me figuring out what bets to place, or what games to play. This is a fund.I will find the
best and the brightest, with a confirmable track record and hire them.

It’s an idea whose time has come.

Ihave bet on stocks long and short for about 15 years now. I’ve done very well. There has already been one
hedge fund started based on my trading results. In those 15 years, I have learned that despite all the claims
and books written about efficient markets, the trading of individual stocks are not efficient. There are always
people trading on better or worse information. There are always people trading onemotion rather than logic.
There are always people trading on hopes of the bighit.What Peter Lynch would call the “10 Bagger”. They
were gambling. Nothing more. Nothing less.

It’s not unusual to hear people refer to trading stocks as no different than going to Vegas. They are right.
Gambling isgambling.

The question really is, which gives the opportunity for a better outcome?

If you play the slots in vegas, you can read what the payout ratios are for each casino.97 pct. 98 pct. If
youplay longenough, thecasino will end up with 2 or 3 pct of your money. Unless of course you
go up to the winning side while you play, and quit while your ahead.

The stockmarket equivalent would be to buy an AtThe Money Long Term(LEAP)Put for 2 or 3 pct of
the stock price. The put would protect your downside for several years, and the stock would only have breakeven or
upside potential over that period. It’s a nice thing, except that it’s much, much, much more expensive than 3 pct. As
a point of reference, IBM which is trading at about 94 today, has a price of $5.90 for Jan 2006 95 puts. It’s $7.90
for Jan 2007 puts. Just to protect yourself on the downside for less than 2 months, till the 3rd week of Jan 05, will
cost you $2.40, or about the same percentage as the hold the house puts on you in playing slots in Vegas.

Of course tha’ts for slots. If you play blackjack. The odds are better and every now and then in your favor. If
you play poker, you are playing against the other players, and the house only takes its commission. Just like your
broker takes its commission.

Unlike the stockmarket, you know the rules exactly.You know without question, the house is going to play by
the rules. The gaming commission appears to actually enforce rules of play, unlike the SEC.

And then there are sports bets. Like any other investment or bet, the question always come down to whether there
is good information available, who knows how to use it better, and who is the competition and are they smart or
not.

Honestly, I don’t know if the best and brightest go to Wall Street or Vegas. I don’t know the number of gamblers
via sports books in vegas vs the the number ofgamblers, I mean investors, in the stockmarket.

I do know this. Most casual gamblers,who are the majority of the money spent,go to vegas expecting to
lose money. It’s part of the entertainment experience. People put money in mutual funds and in their brokerage
accounts and pick stocks expecting to make money. They don’t find any value in losing money on a stock, fund or other
traditional investment. That changes the opportunity completely.

How efficient can a market be when the majority of investor expect to lose money? The sportsbooks know this. They
know the difference between smart and stupid money.

They set odds in order to attract as much emotional, stupid money as it possibly can.It also knows that
thisemotional money will skew the odds and bring in the “smart money”. As a result, they have learned to lay
off their investments so that they arejust taking their cut off the dollars invested rather than trying to
outsmart the smart.

To me, this suggests the smart money is better than just good. It’s very good.

Which raises the question of “How did the smart money get smart “, and do they get better returns on their bets
than investors can buying the S&P500? Can it significantly outperform the S&P as this new fund would be
expected to do?

The smart money doesn’t brag about their results, but in the minimal reading and conversations I have had, it’s
the same people coming back over and over again. The smart money people are doing something right on a repetitive
basis.

When you think about betting on sports, there really is far better information about your local sports team than
there is about any local business in your market. The local papers cover the team every day. The localTV
station gives a report about every game. There areradio stations who cover them for hours at a time. That’s far
more information than you get aboutTyco orComputer Associatesor NFI.

In sports, when someone does something wrong, they pretty much tell you the next day or two. Someone suspended
You know it. Someone hurt They report it, and do a better job of policing that than any industry watchgroup.

And stats? my goodness. There is no comparison. You can tape everything and create your own stats, which I’m sure
every “smart money” gambler does. There are public play-by-plays of every game.There are websites that
analyze every which way from sunday every action and inaction of every player in the game.

There also is no such thing as insider information either.Player and team reps can’t talk to
knowngamblers, but do they really need to?

Reporters are there after every practice to interview the players and coaches. They ask the same questions that
every gambler wants to know, if only so they know who to pick for their fantasy teams. They also get to see and
report on who is there and who isn’t and who is limping and who isn’t.

That’s far better than we get from public companies. Not only can they not disclose material information on a
daily basis, theytry their very best to hide their actual performance when they are required to supposedly
disclose all information.

Public companies play so many games with their numbers it’s ridiculous. Should they expense options or not? Per
forma vs GAAP? One time write offs? Buying company after company? Writing down inventories then reselling them?

My favorite is beating the estimates by a penny quarter after quarter. Could you imagine a team that beat its
competition by 1 point every game? Business, like sports, is not that predictable.

That’s not to say that the information is so good that this is a slamdunk investment. Sales don’t get closed,
product cycles get pushed back, drugs don’t work as expected and players drop passes, miss shots and get hurt.

The argument can be made that this is much riskier than a bond, where unless the company goes out of business, you
get paid the interest rate. Pick a strong company or the government and you are relatively safe. All true. That’s why
i love bonds .

You could also make the argument that when you buy a stock, you own part of a company.Legally it’s true. In
practice it’s not.For non-dividend paying companies, you have nothing but a piece of paper. The only hope you
have if that company starts todecline is to findsomeone whowill buy it from you.

A sports or blackjack or poker bet doesn’t have value beyond that game or hand. In that respect it’s just like the
hundreds of millions, if not billions ,of options that are traded, but never converted, on stocks, commodities and
other assets around the world every day.

Just what hedge funds do on a daily basis, and just what I plan on doing.

308 thoughts on “My New Hedge Fund”

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  5. Biggest single-month fall on record for Hedge Funds!Greenlight..Chris Hohn..Maverick..and so many others are down …actually this was the worst month on record….. add the restriction on short selling impeding their trading…… is it a time to invest with them or sell? All week we spoke about this on the chats at myinvestorsplace.com and we are confused what to do? Sell…Stay..Buy more?? what do you suggest we at the memebers of My Investors Place to do?? thanks

    Comment by joyce abraham -

  6. A very interesting idea. Gambling, basically is all about probabilities and how to make money off them in the long run. However, gambling volatility may be huge and this is a very significant risk factor to consider.

    I believe your not alone w/ this idea but I hope your plan succeeds nevertheless!

    – Mr. Raine Lahtinen
    Lahtinen Advisors SPRL
    http://www.lahtinenadvisors.com

    Comment by Raine Lahtinen -

  7. Are you still running a gambling hedge fund? If not do you know anyone that is? I would like to interview them and write an article on that within my hedge fund blog.

    Thanks in advance.

    – Richard

    Richard C. Wilson
    Richard@RichardCWilson.com
    503.789.7901

    Comment by Hedge Fund Blog - Richard Wilson -

  8. There are still many people who fail to distinguish the difference between gambling and investing.The stock market was nothing more than a casino.I would like to urge everybody to pursue a financial education and control your financial ark.

    Regards.
    ForexCTAs

    Comment by ForexCTAs -

  9. I like the news, even know I have just read the news now, I became interested to know what is a Hedge fund and what it really means.

    Comment by Hedge Fund news -

  10. With the trades and acquisitions made going into the draft, plus the bulk of the team that is carried over from last season, and the trades and draft picks made during the draft, it sure seems like the Pats are going to be the team to beat in the AFC this season, and perhaps in all of the NFL.

    Considering the Pats were almost in the Superbowl last season with a pathetic receiving corps and that they\’ve added very talented players into said receiving corps this season, barring some nasty injury(ies), they look to be the team to take it all.I say injury(ies) because I think they could survive an injury or two to some positions, but if they lost Brady they\’d probably have a hard time recovering.

    I wish I could say that the Redskins did well in the draft and/or in free agency but so many holes still exist that I\’m not sure they\’ll be significantly better than last season. I suppose on face they should be if they can keep their corners healthy. With Landry (argh, hard to type that name as a Redskin!!) back there with a healthy secondary they might be able to cheat up more and put more pressure on opposing QBs. Might.

    They still have what should be a lot of talent in the receiving positions, and Campbell should be better, but they don\’t have the quality on either line (offense or defense) that I wish they\’d have, so it could be yet another year of .500 at best, or worse.

    Still, the NFC East looks to be the NFC Least again this season. None of the teams there look like they\’ll be that good, and none really look ready to step up and take the division.

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    Comment by nfl sportsbet -

  11. I think you should definitely go for it! – I would love to hear the out come

    Comment by Paintless dent repair tools -

  12. Mark,

    Your idea is soon to become reality, i just think you was a couple of years ahead of your time when you first published it.

    Betting on sports, or a sport, which you know in so much intimate detail, will always bring a high win to loss ratio.

    Just as the market forms its price about stocks, so the handicappers at the sportsbooks form their prices based on information they have to hand at that particular time.

    Further to that, the prices will then move with weight of money… and here the imperfections of market information will manifest themselves, as you called it there is less smart money, than stupid money, and as such the smart money will take incorrect prices all day long.

    50 Billion pounds sterling will be traded on soccer in the UK this season. There is a massive opportunity in the marketplace for a fund which can break down prices issued by handicappers and rebuilt with inhouse mathematical modelling and informational resources. This will lead to one or 2 investments per week which should lead to potentially explosive returns over the course of the soccer season.

    Given conventional hedge funds were returning 25% in a good year, i think soccer will yield 35% plus.

    I am currently in the throws of setting up my UK Soccer Trading fund, and I will keep you all posted when I launch. Suffice to say that the sports fund era has finally arrived.

    Comment by Kulbir Sohi -

  13. Mark actually did go with a reputable handicapper and turned his initial investment into well over five times its original value. This is great and this is why I\’m have been in this business since 1971. I think this very public experiment proves
    once again that professional handicappers arent nearly the hucksters or practitioners of black magic that theyre portrayed as. Its simply hard
    work, mathematics, and knowing more than the general public. Just like broking. Sports betting as a legitimate moneymaking venture is not only much more enjoyable and entertaining than playing market, but it can return higher dividends and is more fluid than stocks and bonds. If youre willing
    to go at it over the long haul, Im telling you, this can be a great income supplement and a really fun way to make money. It has been for me. I dont
    recall who it was that Cuban used, but I would love for him to try our service at no cost to him or his readers for a period of time. Please get in touch if intersted.

    Comment by Doc -

  14. Mark — I am currently working on the same idea. The sky is the limit on this one. I would be first in line to work with you on this. My expertise is in NCAA Football. It always takes Vegas a few weeks to catch up on the 119 teams in 1-A ball. Most of Vegas\’ time an effort is in handicapping the NFL. Anyway, please let me know how I can apply for a position with you. My education includes a BS in Engineering and an MBA in Finance. Work experience includes coaching at the 1-A level and working as an analyst for a growth fund. I could also go as far as saying that if I don\’t beat the S&P or Dow you don\’t have to pay me. Lets do it!

    Comment by Mark -

  15. Mark, this can be done and is being done … legally, without obstacles. If you know people that are serious I can direct them to go.

    Comment by James Cochran -

  16. Yeah, the efficient market theory is BS. Amateurs trade on emotions and pros are here to take their money.

    Comment by taximen -

  17. I know this article is relatively old, but I was looking online to see if there were any stocks of a company I could buy on any exchange in the world that uses its fund soley for professional sports betting, and as a result came across this article.

    Well, I\’m quite certain if you were to open a fund that used its money solely for sports betting and if you hired the right people, I don\’t see how you can not turn a profit. The reason I say this is because you will notice that a lot of professional sports gamblers in fact really do make good profits year after year. In fact I started betting in 2001 and now I just do it for a living. In fact a bunch of friends I know give me a large sum of money to invest and for the past 2 years, I\’ve been able to double their money. Realistically and very conservatively you can expect 40-50% ROI.

    In a sense this is like running my own private fund, and in the fund I have 3 categories all based on risk preference:
    1) Low risk – a strategy that implements always only betting 5% of my bankroll (Has been able to achieve 100% ROI over the past 2 years)
    2) Medium risk – This is based on the theory of my low risk category, with the occasional plays that would warrant a higher wager based on strength of play.
    3) High risk – Guess the title speaks for itself, but you can make a lot or lose a lot with this fund. (It\’s more to have fun but has done extremely well this year)

    Now I wager on 4 Sports primarily
    1) NBA
    2) NFL
    3) Soccer
    4) Tennis

    But the funds I mentioned above are based solely on NBA, which is what I\’m comfortable with.

    Having said all that and given my experience, I have no doubt in my mind that a Sports Betting Fund would be highly successful as you know it will outperform the market and most other investments, and with good money management I see very little chance of things going bad. Hiring the right talent would be key obviously.

    I hope your still looking into this (unless the fund is already open) as you can be sure I\’d invest a huge amount into this fund, as I believe it is relatively safe with high returns if done right.

    Just wanted to offer my thoughts and experiences.

    All the best.

    Comment by Alistair -

  18. Mark,

    My friend and I have been at the sports wagering errr sports investing thing for several years. I call it investing as we have been producing solid returns. We just recently started a site to display our prowess. I am responding as I have read this blog several times and think this idea possesses a lot of merit. I would love the opportunity, as I have also been interested in becoming involved in the hedge fund arena. However, I have noticed our returns have been better than most can produce in the securities markets. My passion is to do nothing but invest in securities and sports and I have had success doing that, just trying to scratch up enough capital to get a start at doing this for a living.

    I decided awhile ago that this is my goal and am in the process of getting there, its just it takes a fair amount of capital to strike out on your own and have no other source of income. I have found out the things that I am good at in life and they are sports investing and securities trading.

    An example of my securities success is I have recently been investing in an uncovered area of the commodities market. There is a commodity named molybdenum that is used in steel and is used due to its anti corrosive properties. This commodity is in the sweet spot of macro-economic trends. This commodity will be increasingly used for oil pipelines and nuclear reactors as well as steel products in general. With the developing countires increasing their appetite for products and the world\’s growing need for energy this is in the sweetspot. Further, molybdenum has been under mined as prices plummeted to about the $3 level in 2001 now this commodity has been trending upward as demand is increasing and the supply is not there to meet the demand. Prices are now in the $25 range and should only go higher, couple that with the fact that China has reduced their export of Molybdenum and you have a classic imbalance of supply and demand. There are several ways to play this, my choice are small miners (I played it with a small miner named Idaho General Mines (GMO) as they should be supplying about 8% of the world\’s supply from their mine in late 2009-2010 Q1).

    Anyway, back to sports investing. My friend and i had a documented record of 52-24 in NCAA football over the last two years playing selectively on NCAA games only when everything lined up to make these solid selections. We have produced a winning percentage in NFL the last two years, somewhere in the upper 50 percent range (sorry do not have my records in front of me at the moment). We won 59 units in MLB last year. We are currently hitting at a 55% rate in NBA this year.

    Anyway, I love this idea and know it can work quite well financially. Further, I would love the opportunity to discuss with you why my friend and I could provide you with winning returns over the long haul in this most unique and ambitious endeavor.

    Thanks,

    Kenny

    Comment by Kenny -

  19. So, You are starting new Hedge Fund, so i might think to help you.
    Let You have to know something about Equity Market Neutral- State-of-the art Arbitrage Strategy for every market environment.

    The classification of different \”hedge funds\” is not entirely straightforward since some funds may use a combination of strategies, if they disclose anything at all. These categories can be categorized further in many ways, but our return generating technique should be categorized as a market neutral statistical arbitrage investment process, which designed to be among the less risky \”hedge fund strategies\”.

    The reason we chose market neutral is because its one of the few products where \”neutrality\” is a core attribute. Neutrality implies something about what risks are being taken and which are not, so which risks are being taken in market neutral? The term
    \”market neutral\” clearly implies that the portfolio should in some sense be neutral with respect to the market itself. Believing that equities behave in a mathematically describable manner, we can implement a low-risk, market-neutral analytical equity strategy.

    Equity Market Neutral investment refers to funds that hedge against market risk factors, thereby becoming \”neutral\” to the market. Market Neutral- Statistical Arbitrage utilizes quantitative analysis of technical factors to exploit pricing inefficiencies between related assets, neutralizing exposure to market risk by combining long and short positions. It is an Arbitrage process of buying assets in one market and selling them in another to profit from unjustifiable price differences. This violates the expectation that the same product should sell for the same price.

    The ability to \”hedge\” is a necessary condition for arbitrage because it can eliminate risk. Thus, a hedging transaction is intended to reduce or eliminate the risk of a primary security or portfolio position. An investor consequently establishes a secondary position that is designed to counterbalance some or all of the risk associated with another investmentposition.

    This strategy can also be classified as absolute return strategy since the return is independent of the performance of the underlying market and hence a return may be generated whether the market goes up or down. Absolute return strategies represent an investment style or discipline, and are usually classified as a subset of the alternative asset investment class. Absolute return performance is primarily derived from RCGF manager skill, and not from the overall direction of a traditional market, such as equities or fixed income.

    There are tremendous advantages to having an equity market neutral style in an investment portfolio. Notably, returns are independent and uncorrelated to market direction. Volatility is usually low. Returns are often attractive and constant regardless of market or economic downturns. Equity market neutral strategies often complement other investment strategies, providing a balanced and diversified portfolio.

    Comment by Shailendra Dubey -

  20. Mark,

    I recently came up with this exact idea.
    In reasearching this concept I came across your blog from more than 2 years ago.
    I would greatly appreciate it if you could bring me up to speed on where you are with this Fund.

    Specifically:

    Has the fund ben formed? If so how?
    If not, is it still in play?
    What obstacles have to be overcome? Regulatory, logistical, etc.

    I\’m sure any other wisdom you can impart on this idea would save me alot of time/headaches.

    Thanks Again,

    JW

    Comment by Jim Williams -

  21. Mark, anything new on this idea…

    Comment by Matt -

  22. Can anyone tell me where to go to find out what a hedge fund is? There\’s a story on nytimes.com about them that doesn\’tmake it clear, and every site I\’ve visited uses a whole bunch of other terms that I also do not understand.

    Comment by Morgan -

  23. I want to extend you a very heart felt thank you..

    Comment by Jessica Simpson -

  24. Sports Arbitrage – Risk free betting
    http://sportsarbitrageinvestor.com

    Comment by Mike -

  25. I trade binary options on a site called TradeSports.com. If you are looking to move forward with this hedge fund idea, this is a great starting point.

    Comment by Eddie Galimi -

  26. This sounds good. I’m into sports betting and playing the odds. I use a program called SureBetPro not sure if you herd of it before. But it helps pick threw the bookkeepers and find winners.

    Comment by Chris -

  27. I totally agree with your assessment. Stocks and Bonds are legalized gambling ! What makes it legal has been the “professionalism” that has been injected by the industry and by lobbyist that have been funded by the industry.

    I don’t know that I would bet against Jimmy the Greek on a sports bet and I don’t know if I would call Jennifer Harmon or Greg Moneymaker “professional’s in their trade

    Comment by David Atkins -

  28. Please comment on the income tax fraud.

    Comment by Naz -

  29. I’m quantitative strategist at a hedge fund, and I feel that Mr. Cuban is incorrect about financial theory. Mr. Cuban says here that the financial markets are inefficient, as if it were a bad thing: “I’ve decided to start a new hedge fund. However, this hedge fund won’t invest in stocks or bonds, or any type of business … I have learned that despite all the claims and books written about efficient markets, the trading of individual stocks are not efficient …” This is flawed reasoning. If one is truly able to detect ineffeciencies in the financial markets then one should be able to profit from those ineffeciencies. For example, Mr. Cuban pointed out that investors often over-react to information – this is a matter that is the subject of intensive study in Behaviour Finance and some people are able to even quantify such behavioral ineffeciencies and profit from them.

    Comment by Aamir Vazir -

  30. I’m quantitative strategist at a hedge fund, and I feel that Mr. Cuban is incorrect about financial theory. Mr. Cuban says here that the financial markets are inefficient, as if it were a bad thing: “I’ve decided to start a new hedge fund. However, this hedge fund won’t invest in stocks or bonds, or any type of business … I have learned that despite all the claims and books written about efficient markets, the trading of individual stocks are not efficient …” This is flawed reasoning. If one is truly able to detect ineffeciencies in the financial markets then one should be able to profit from those ineffeciencies. For example, Mr. Cuban pointed out that investors often over-react to information – this is a matter that is the subject of intensive study in Behaviour Finance and some people are able to even quantify such behavioral ineffeciencies and profit from them.

    Comment by Aamir Vazir -

  31. After many varied investigations as a police officer over a 34 year career, it never ceases to amaze me how many truly smart people, yes even brilliant people, tend to spend their lives on the edge of the law, or at least on the edge of moral obligation, just to make a fast buck.

    Some of the brilliant people on this blog are cases in point. So are Bernie Ebbers, Martha, Lord Conrad Black et al. They too had brilliant ideas.

    Take care not to follow in their foot steps, as you use your obvious talents to walk down the slippery slope of pure profit.

    Hey “pure” profit! Now there is an oxymoron!

    If even half of you used your brilliance to actually help other people, I have no doubt it would be returned to you tenfold.

    Take Care not to slip

    H.A. Pelham
    FuturesExchange.net

    Comment by HAP -

  32. a gambling hedge fund sounds like a great idea to me!

    Comment by the online sports bettor -

  33. a gambling hedge funds sounds like a great idea to me!

    Comment by the online sports bettor -

  34. If you would like to witness Syndicated Fund in action. Come and take a look at the on going documentation blog.

    http://clutchplays.blogspot.com/

    Comment by Clutch -

  35. http://www.yesmba.com

    Comment by good -

  36. Hi Mark:

    Are you interested in having a completely automated sports arbitrage trading robot make money for your new hedge fund?

    Based on my personal experience over the past six months all of the sportsbooks are very quick to adjust their odds to eliminate arbitrage trading opportunities. To mitigate this I’ve developed the skill to execute a trade manually in less than 2 minutes while applying a proprietary eight-step process that eliminates virtually all the risk.

    It has become patently apparent to me that this manual training process should be replaced with an automated system. I have many years of experience building web crawlers for the staff recruiting, office supply, electronic component and automotive sales industries. I have built proprietary tools based on reverse engineering the HTTP protocol that allows me to reliably convert web pages designed for use by humans into computer sensible data.

    We’re both interested in making money… I can create the robot. Are you, or do you know someone, interested in handling the business side?

    Regards,
    Brad
    –
    Brad Codd
    Laguna Hills, CA
    949-716-7580
    maverick@infoquick.com

    Comment by Sports Arbitrage Trader -

  37. I am operating a sports betting arbitrage fund.
    One can easily double their money each year with
    sports betting arbitrage.
    For those who doubt that such opportunities exist,look at the following web site:
    http://www.oddsexchange.com/servlet?cat=surebets

    Here are a few arbitrages available today.

    Event Profit
    St.Louis Cardinals vs San Diego Padres 12.6%

    Los Angeles Angels vs New York Yankees 8.9%

    Ice Hockey :: Finland :: SM-liiga 6.3%

    This is the profit regardless of the winner.
    Heads you win. Tails you win.

    Contact me if you wish.
    awesome@winning.com

    Comment by Maynard Blair -

  38. Well heres a little bonus to the betting game check out

    http://www.sportsbetonline.info

    they are adding 15% to your initial deposit which means you can afford to lose 15% before you make any loss !!

    Comment by Webster -

  39. I’ve seen a website that does hedge betting for you automatically. It claimed to return 10 percent on your investment in ten days. i have not been able to find this since i first saw it almost two years ago. Is there anything out there similar to that?

    Comment by Curtis Schlei -

  40. Mr. Cuban,

    Take the time to read “Ugly Americans”. It’s by far the best book out there on the true account of running a hedge fund.

    Interesting Blog by the way. I would pass on this opportunity if I were you though.

    Boyan Josic

    Comment by Boyan Josic -

  41. all i wanted to know is there an reinvestment account that i can start with you, you sound like my kind of guy, gambling IS just like the stoke market ALOHA from the 50th state where we can not gamble gotto go to vegas just to

    Comment by andrew lai -

  42. Mark, I responded earlier and if you personally had read it you would have recognised a potential success story in progress. I’m a 37yr veteran of the Las Vegas sports betting tug of war, licensed as a key employee by the NV Gaming Commission. You have the resources to check me out.
    I have the key element that will make your idea a monster. Something is missing from your model and I have it. I’ve worked the past few years perfecting a business model like yours but much more advanced and thought out. Due dillegence has been done, business plan in order, and with the proper non disclosure agreement in place, I would share it with you. It’s yours to say no too.

    Comment by Scott Schettler -

  43. Mark,

    I am writing to you because of the power you hold in the United States Marketplace and Wall Street. I am sure that if someone who was employed by YOU at one of your companies, stole from the company by counterfeiting some of the companys checks, or stock certificates or personnel info….that you would take the appropriate actions and insure that the individual was fired if not prosecuted.
    Now, as I initially stated above, you have a large amount of influence and POWER in what trends are excepted or rejected. Therefore I am BEGGING YOU to PLEASE take a look at the rampant COUNTERFEITING OF STOCK SHARES that has been going on in the marketplace for a couple of years now. While I understand that the stock borrowing pool had a purpose once, it’s time has now past! You are aware that this is going on in the US marketplace, yet I have seen NO REPRESENTATION by you of it’s wrongfullness. Now is the time to take a side on this issue and be a leader within the reform that MUST TAKE PLACE if the market is to continue on it’s upward climb. Therefore, I am personally inviting you to be my guest at a RALLY against the Counterfeiting of Stock Shares, on the steps of the DTCC on July 29th, 2005! Show your support for the average investors who sink their hard earned money into the companies that are being stolen away! Please respond! Thank you.

    http://www.counterfeitconspiracy.com/

    http://gopetition.com/online/6645.html

    Comment by Barry HndtoHnd Shipes -

  44. The two most important things to remember with any way you wish to invest: Research and Diversify.

    Comment by RJ Paperman -

  45. Mr. Cuban,

    I am currently a student at Brown University concentrating in Busniness Economics / Public & Private Sector Organizations. I would love the chance to become involved with your sports hedge fund. I really feel that the fund could be quite profitable. I have extensive experience and a good track record in horse racing as well as profitable poker experiences. My knowledge of gambling as well as my education in economics makes me a viable candidate for your start up. I am presently trying out my own variation of your hedge fund idea. Please feel free to contact me.

    Comment by Mike -

  46. I am a 25 year old bond trader at the CBOT in chicago. I am interested in becoming one of the “best and brightest” in your hedge fund. My father is a psychologist with a PhD from Yale and we have been working on ideas revolving around psych research and sports gambling. Let me know what I can do to help you out.

    Comment by Abe Rothbaum -

  47. Wow , Thanks Mark for the analysis. Some very very smart people are telling me that you are quite on with the smart money vs dumb money thing in regards to line makers.I have now in my control a very smart money person. Like nothing you have ever seen.

    Comment by Richard E. Barsom -

  48. Hedging is profitable.
    http://www.sportsarbitrageinvestor.com

    Comment by Dina -

  49. This will just get people more excited about gambling on sporting events. Then we will have more hedge funds with this idea, most of which will be bad hedge funds because Mark will get the top gamblers to work for him. So in the long run we will have more people with gambling problems and on top of that they’ll be losing money because they can’t afford to buy into Marks fund, but instead go with Tommy’s fund from down the block.

    Comment by RP -

  50. Mr. Cuban, I am the best there is in Black Jack.

    Comment by YP -

  51. MARK,
    I’ve paid my way through college, and have never had a real job. In the age of the internet (or internets pending where your from) all the information you need is right there. I’ve also found that personally I have the most success in Baseball. Did you know Vegas makes the least amount of money on baseball. The percentage of players that gamble on the sport is less than the other big two, but Vegas takes there biggest hit in this sport. Why? First of all, one is basiclly just capping pitchers, rather than a whole football team or basketball team. Secondly, baseball is harder to fix. I know some people don’t believe in fixes, but trust me it happens. Watching football is basiclly theater in motion. The last aspect that makes baseball not only the eaisest sport to cap but also the most profitable is the good ole money line. There are no half point loses or pushes. If you take no chalk the whole year and bet 1-2 units a day on dogs, one could hit at a 42% clip and make a profit. And that is your average bettor. If someone such as myself that knows what there doing can make a pretty penny. Anyway, I know I might not be making a lot of sense, but trust me it works.
    P.S. I like the Mavs +6.5 tonight.

    Comment by Samuel Manzella -

  52. Would be interested to hear how this Hedge Fund goes. I am considering a similar venture in the UK. In the UK the betting market is slightly more evolved, and with betting exchanges growing, the market is now barely an over-round, so you only need to beat the market by 1-2%. The only problem would be finding sufficient equity in the market to support the high-value investments you are undoubtedly considering. But with betting volumes growing month on month, this problem is going to lessen as time goes on.

    The advantage of the sports market is that a significant percentage of money in the market is ’emotional money’ rather than ‘logical money’. Therefore finding that 1-2% margin is that much easier.
    Good luck,
    Ian Hamilton, London, UK.

    Comment by Ian Hamilton -

  53. We Offer you: College Football and Basketball -105, 3 Team Teasers 2/1 in College Sports, Pro Basketball and Football -108, Dime Baseball line…and much more!

    Comment by Bernie -

  54. Mr. Cuban,

    I’ve been reading the responses to your desire to start a new hedge fund
    with great interest. Everybody wants to join in, but what they bring to
    the table seems to have little value for this venture.

    I don’t see any “best andthe brighest” showing up here. Where are the
    responses from the best handicappers? The best developers?

    Surely you can’t have a hedge fund for horses if you can’t pick winners.
    All the wall street smarts in the world won’t prepare you for making
    money at the track. It appears that horse racing people don’t have a wall
    street background, the wall street people don’t have a horse racing
    background.

    I’m a developer with over 25+ years of software development experience.
    I have been developing trading and handicapping systems since 1978.
    You’ll be looking a long time to find someone with my various
    combination of skill sets and vertical market applications experience.

    I’ve been developing a product that I think you’ll find most useful for
    this venture. In short, I have a 750,000+ line J2EE Java application
    built over many years, for the sole purpose of making money at the track.
    Nothing like it, anywhere. Period!

    I would like to keep the product features, and the various business
    models associated with it on a closed communication channel between
    you and myself for now.

    I was wondering if there way a way that I could send you a private email,
    or set up a phone conversation or a possible demo of my product with you.

    I am trying to keep the discussion of what I have, and what it does down
    to a minimum.

    I assume that you’re located in Texas, and I’m willing to fly there to
    give you a demo.

    I’m confident that you’ll find that what I’ve built, very well suited to
    putting your hedge fund in to a fully operational state.

    As for the “best and the brighest”, there can be only one.

    Just call me “HighLander”…

    I hope that you maintain my email address as private, and that we can
    enguage in some form of communication.

    Thank You

    Comment by highlander -

  55. There are a number of betting exchanges out there where you can actually make this work.
    Personally I would recommend http://www.backandlay.com as it has a low commission rate, but betfair is also a good choice because it has a higher liquidity.
    The wiki pages for those two betting exchanges are http://en.wikipedia.org/wiki/BackAndLay and
    http://en.wikipedia.org/wiki/Betfair.

    Comment by Betting Exchange -

  56. To Mark:
    First of all, your idea can only be accomplished on a large scale with sports betting (vs casino games, poker, etc). It’s the
    only gambling market w/ enough volume/liquidity that will allow you to “take” large amounts of money from Joe Public vis-a-vis the bookmakers/intermediaries.

    Here are your 3 constraints:

    1. Can you “beat the market” w/ a high enough winning % overcome transaction costs ?

    Answer: Yes. The sports betting market is inefficient. Not that anyone has inside information. But the information is “weighted” incorrectly. The “value” that the public places on pieces of information is not aligned with the “true value” of those pieces of information. This creates inaccurate point spreads. The factors which are weighted incorrectly are both statistical (e.g. yards per rush) and psychlogical (e.g. quantifying the “value” of a team in a must win situation).

    If you run the #’s in a spreadsheet, you will find that by picking 55% pointspread winners in only 5% of “bettable” US pro & college events each year, you will achieve ROI of at least 100% on your bankroll. (this varies depending on the size of each wager).

    For those skeptics who think sports betting is efficient, think again. See:
    http://wired.com/wired/archive/10.03/betting.html

    2. Can you overcome practical limitations imposed on winning gamblers by the casinos ?

    Answer: Do this in Vegas? – forget it. Consistent Winning players are shut off in Vegas, and its moot anyway, since bet limits are “low” there. It would need to be done by a syndicate which hits offshore books, or by using one of the online exchanges, where there are no limits (e.g. betfair.com or betbug.com). On these exchanges, you can sucker the public in by offering them more attractive point spreads on the “wrong” side. Over time, I think these exchanges will grow in volume, b/c of their low transaction costs. The other option would be to start/acquire an offshore casino (but see the case Cohen v US).

    3. Can you overcome legal issues ?

    Answer: Of course your lawyers are working on this. My take is that While the recent WTO ruling in favor of Antigua vs the US provides hope that online sports wagering will be legalized here, your best bet in the meantime would be a several pronged approach:

    – acquire an offshore casino (but see the case Cohen v US), and vary your pointspreads to attract money to the “wrong” side. Lest you think people will figure you out, you could use decoy spreads on other games (after calculating the elasticity of demand for spreads and teams). Also see this article: http://www.theregister.com/2004/03/23/lock_down_gambling_sites_go/

    – acquire offshore casino, and only accept wagers from non-US bettors (lower volume though)

    – in lieu of acquiring an offshore casino, run the fund from a country where placing wagers is legal

    About me: I use artificial intelligence (neural networks) to develop models that look for mispriced point spreads. I have a degree in Operations Research, and had a perfect score of 800 on my Math SAT. I won’t brag about my record – we would really need to talk for me to convince you and/or your analysts that I know what I am doing here.

    I can be reached at: sports_quant@yahoo.com

    Comment by sports_quant@yahoo.com -

  57. I’d have to say that 10% of the “utility” of this, my first visit to blogmaverick.com, has come from the reading of Mr. Cuban’s article and the other 90% has come from perusing his readers’ replies. What a high winner-to-whiner ratio we have here (as opposed to say, your typical Yahoo stock message board). For instance, congratulations to Patrick Muldoon from post 26 whose worst year since he started sports betting in 1995 was a $16,000 gain. I just do stocks and not sports and wouldn’t have thought such consistent winnings were possible in the latter arena; my visit to this blog has been a heads-up. On the other hand, shame on broker Ted Baturin (#96) for having such a defeatist attitude…

    “The average person, who my whole business is made up of, has NO shot in the stock market, and only a decent shot in growth/value funds.”

    I venture to say that your experience with your customer base is not representative of the entire universe of investors and traders. The truly competent ones will not have come your way for 2 reasons: 1) high commissions and 2) your “can’t do” attitude would inflict too much of a strain on the broker-client relationship. And to Matt Beauchamp from #107 who has been “ a bookie for 5 years and not ONE of my customers has made money”, if you had had any winners wouldn’t you have chased them away anyway ?

    There have been a lot of thought provoking posts on this blog…

    #19) I never stopped to think about how much $$ PartyPoker takes in. I’m afraid we’ll be seeing their commercials for some time to come.

    #27) I’ve done well in the stock market for a number of years and have a high degree of confidence in my abilities. So why not give Marketocracy a try and get a crack at managing some money professionally ?

    #31, 79) This Justin Wolfers looks like he’s worth further investigation. With academia being such a stronghold of the random walk mindset, it’s refreshing that he would encourage his students to do blackbox experimentation.

    #33) SAC, Paloma, Andrew Lo, etc. are worth a look too. I love reading about winners.

    #42) I’m sure heads are going to wag on this but I can’t help looking at the stock market in a similar fashion re: the changing odds that face the blackjack player. One low card played means one less low card in the deck. And a 500,000 share block just dumped means there’s 500,000 less shares of overhead – the more oversold a stock gets, the more worthy it is of consideration. Similarly, a sudden change in the futures vs fair value will have an effect on heavily traded stocks that can last as long as several minutes. And important developments at a particular company will most likely have an effect on the sister stocks in its sector that will a) not be immediately reflected in their stock prices and b) last for several hours, days, or even weeks. (What I’m suggesting with these last two points is that some stock market events are not independent of each other in the same fashion that you’d expect successive rolls of the die to be)

    #51) Are you talking about Bill Gross, the world famous bond manager ? He hadn’t struck me as being a Vegas guy. I’d love a link to read more about his take on his gambling experiences.

    #64) What a train wreck at the Golden Nugget. As long as the House leaves itself open from time to time, I guess there’s hope.

    #119) Your work was reviewed by Belichick ? Seriously ?? Did he indicate that he would incorporate any of your findings into his playbook ?

    Final Comment:

    For a number of reasons I don’t see the stock market being as similar to gambling as Mr. Cuban’s article implies. But the most relevant one has been highlighted by some of the latest posts. The sports betting world just can’t absorb the size that the stock market can. Even Buffett, at 40 billion, can still find ways to play.

    But I’m not sure that a maximizing of gambling $$ is what Mark is after if he decides to proceed. Just showing that it could be done would yield great satisfaction. It would also provide an opportunity to re-educate the public about the workings of risk and reward. And the dollar value that could be placed on the publicity that would ensue from creating a successful multiyear track record (with having a strategy of keeping the bet size manageable so as not to strain the sports betting complex) would probably exceed the value of the actual winnings.

    Comment by PizzaByNight -

  58. Two amazing, simply amazing, aspects of the comments to Mark’s blog: 1) the “experts” willing to help! Goodness this man has proven his ability to make money, but these folks know more 2) Not one loser! Everyone who gambles beats the line 60% of the time, or outperforms the S&P for 10 straight years, or easily wins tens of thousands on sports annually. Let’s hear from the guy(s) who lost it all–their assets, their jobs, their families–because they knew winning was easy.

    Comment by Dennis Smith -

  59. Comments 122, 123 and 128 touch on the biggest challenge you’ll face–that is finding a way to extract the inefficiencies in a scalable manner. It comes down to a combination software architecture, statistics and common sense engineering problem at the end of the day. The answer is a small team of experienced arbitrage traders who are versed in software development, sophisticated data analysis/mathematical techniques and a large measure of creativity and common sense. The entire investing process will need to be almost completely automated in order to make the economics work out. You won’t be able to afford much overhead either. It’s a lot of fun and very doable if you’ve the right skillset though.

    Comment by JM -

  60. This is going to be very difficult to implement for a number of reasons:

    1. economies of scale…for “market”-type betting (sports, horses, etc), the more money you put in, the more you are moving the odds (payout) against you. There is a limit to your profitability due to this.

    2. Finding enough profitbale bets. For normal casino games, the casinos will move to eliminate any exploitable, provitable edge when it starts costing them enough money…this is why you now see reduced pay tables for video poker, continuous shufflers and no mid-shoe entry for blackjack, etc. Casinos will only allow so much money to flow out their doors until they put a stop to it.

    3. Sure, you could “employ” skilled people such as expert poker players or top sports hadndicappers. But to have them work for you, you would have to pay them MORE than they are making playing for themselves.

    In all, this is a much more complicated proposition than a lot of people seem to believe, never mind the regulatory and legal issues.

    There are some more comments here:

    http://offshore.ipbhost.com/index.php?showtopic=25309

    http://offshore.ipbhost.com/index.php?showtopic=25405&st=0&

    Comment by drunkguy -

  61. I have some comments on the economic aspects of this topic over at my blog (click my name for the link).

    Sorry if this seems like a “promotional comment,” but I actually do have some relevant thoughts.

    Comment by Jeremy -

  62. This sounds interesting, if you’re serious. How are you going to recruit your players? Gamblers know other gamblers especially poker players, its part of the game. I am in and I know of a few others that are interested.

    Comment by Cory -

  63. Congrats Mark.
    This blog. just made the Front page on cnn.com

    you da man “carville”… “spinster”.

    Comment by Mike Verinder -

  64. Mark,
    Equating the “market” to Vegas simply means your working with the wrong Wealth Creation and Management Group. Send me an email and I’ll try to work you into my schedule.

    Comment by Walter Huzarevich -

  65. Traditional gambling is great, if you know how to utilize the information and pick your spots you can basically just wait around and make tremendously positive EV bets. The only problem is, you’ll never be able to scale any operation to any significant size. Sure, if you get all-in AA heads up vs. AK in a game on NL hold’em, great for you, but how much could you possibly have riding on that bet? Let’s be extreme and say $1M.. a near worthless figure if you’re managing a small portfolio let’s say 250M. Same thing with blackjack or sports betting, you’re not going to find anyone who’s willing to give you action at any sort of significant level that you’ll have any sustainable edge in. The only plausible way to build a true fund would be to hire hundreds of the best gamblers in the world who could each manage a seperate bankroll of a few hundred thousand? million? the costs of which would be astronomical… provided you can identify (skill vs luck) and convince them to work for you.

    Comment by David -

  66. Where would you get the volume to make this worthwhile? Sportsbooks don’t just take three million dollar bets. Their whole goal is to be flat, and just keep the juice. You could use tradesports.com or some other online futures market, but their isn’t enough volume there for a hedge fund of any size.

    You could start your own sportsbook, but then there are legal issues galore and if your lines don’t match up with other sportsbooks, people will only give you one sided action, a huge risk.

    I don’t think sports betting is scaleable, at least not now. I normally like what you have to say, and you never said how you actually plan place your bets but i find it hard to believe that you are serious.

    Comment by John -

  67. Why start this fund for other people to gamble with your money? If you want the best return for your investment, and want to be involved in gambling, buy your own casino.

    Comment by Andy -

  68. Mark,

    The fund could get a lot of attention from institutional investors and large asset managers in the pension and endowment fund business, because of the diversity it could bring to their portfolios, as well as the superior returns.

    Bottom line is that “betting” is what the entire financial sector is in the business of. It all comes down to risk/reward. The controversy stems from the fact that most lay people aren’t going to understand it unless it is put in perspective. Sports and entertainment represents a huge sector of the economy and the synergies between it and the rest of the financial community have never been exploited. Good PR for this will be essential.

    The fund could actually be set up to be effectively self managing (by indexing the fund to existing odds boards in Vegas that already have visibility). This would dramatically reduce overhead costs at the same time. This reliability would help make the fund more attractive to large outside investors and would legitimize it to the public at large.

    I’m a 28 year old about to graduate with a Masters in Finance and Economics up here in Boston. I’ve become somewhat of a sports specialist on all of my class related projects (much to the dismay of my professors). I’ve come up with a proposal for the NHL to get back in gear through a bond securitization of their TV contracts and other revenues that could fetch as much as $10 billion for the NHL right away and countless millions for bankers…the project is still an academic exercise at this point. I’ve also done an econometrics project on football plays in the red zone…my results were reviewed by Bill Belichick and the New England Patriots.

    Anyway, I’d love to be associated with this at any level given that I believe it has the potential to become the first and most successful fund of its kind given the exposure that you could bring to the table.

    Comment by Brendan -

  69. Ok, sorry for the double post, I currently run HedgeBlog at my website http://www.xhedgefund.com and this is my latest entry:

    Mark Cuban’s Hedge Fund Article
    I am extremely skeptical, more than skeptical that Mark Cuban, owner of the Dallas Mavericks is launching a Las Vegas style gambling hedge fund.

    He cannot do this without David Stern going ballistic on him! Just not possible.

    So after visiting his blog and reading the 100+ and counting comments I came to the conclusion that he lured all us hedge fund people over there to see his nifty blog. It was so nifty that I wanted to trade this one in for theirs!

    My snooping around led me to the company that hosts his blog. It’s a company called Weblogs, Inc. and he is the seed investor in that company. It appears that they are targeting their product to different niches and currently have 50 blogs up and running. This is not a blogger for the average person, it seems like it is invite only with editors to boot.

    With blogs all the rage, Mark Cuban just gave us a nice little demonstration of its reach and potential, better than anything he could do with a Powerpoint presentation. We’ve all been suckered by Mark Cuban! Now who wants to invest in his blog company because this was the best Powerpoint presentation on Weblogs, Inc. you could possibly give.

    Comment by BB -

  70. Mark,
    For the first time I can’t understand the logic in your post. I’m assuming it’s a test because I think you know that the NBA would probably not allow you to pursue this venture. The way a person make REAL money from their investments is the VERY reason that you mention as the problem with investing in stocks – inefficient information. It’s that the majority is usually wrong and are too lazy to do the due dilligance to make an informed decision. When a situation arises where there is large amounts of information like sports betting, the difficulty in making money in such a venture is extremely difficult. You have to beat the juice and the spread – the people making the spread have access to all the information and more that you are talking about so the sports betting market works very efficiently. If you throw in the juice you are setting yourself up to lose 100% or make 91% on each investment. I doubt that you would put your money in any venture where the risk is 100% loss only to have the gain capped at 91% – you scored a much higher return with your business ventures.

    I’m surprised that you have brought this up as a viable venture. I’m even more surprised to see all these people thinking that this is a great idea. An individual makes money because the markets are inefficient not because they are efficient – every finance undergrad understands this – if efficient market theory holds true nobody makes money in the markets because it assumes that all the information is public. You have acknowledged that this is not true – therefore, there are more money making opportunities in the markets. Sports betting works more efficiently than the markets because of the vast amount of information out there so it’s logical that a gambler will have a more difficult time making money because they have to beat the spread which is a reflection of ALL that information.

    I hope that you were joking at this suggestion and look forward to you posting about money making opportunites in business and capital markets.

    Dan

    Comment by danj -

  71. Obviously this is a joke now that I think about it. He just cant do this without issues with the league. But I am pretty amazed at the ranking this thing received on google in just a matter of days. 2nd page on a search for “hedge funds”.

    I dont know what this Weblogs company is that Cuban uses but methinks he done dragged us all over here to see his nifty blog! I like this blog setup better than blogspot. So I tried to get myself one and couldn’t……so whats the real deal here? Trying to attract Hedge Fund capital for this blogging company?????

    :0)

    Good luck, feel free to send me an email when Weblogs, Inc. starts letting us poor folk get this blog! If I am pretty close to why you posted this entry send me an email! You have generated more comments on this post than any other I think. Afterall, blogspot was bought out by google and blogging is all the rage now allowing people to bypass the media as well as participate in it.

    Comment by BB -

  72. If this is a serious proposal, I have to echo the suggestion that you’d probably be better off working as the House. The problem with the player side of the table is that it doesn’t scale well. The casinos won’t let you make big enough bets to get a decent ROI once your bankroll is more than a million or so. Only a few casinos allow really big bets, and they keep close track of the big players, eventually barring the biggest winners even if they can’t figure out why you won.

    My game of choice is blackjack, and I was on a team with a 6-figure bankroll some years ago. Now I’m listed in the Griffin Book and mostly can’t play under my own name. Blackjack might work for your venture if you could recruit and train a continuous stream of new faces, but quality control is very difficult. It takes a while to develop the necessary expertise and you need to make sure your players are playing well even when you aren’t watching them. Your players can’t all use the same strategy or the same betting range or be seen together. And at the larger stakes, when you get barred at one casino they send the picture around everywhere else too.

    Still, it’s intriguing. Teams do have a huge advantage over individual players if you can make it work.

    Comment by Glen R -

  73. Don’t take betting advice from John Camacho.

    Enjoy

    Comment by Scott Patterson -

  74. Well Mark you will need to invest in something new once you loss all your money in Charter (CHTR). Amazing to me you still own that stock while Paul Allen your moron of a friend screws the shareholders everyday. Only problem with sports betting is the fix is just as bad as Wall Street. Even if you use tradesports you’re still going to have no advantage. Market makers use overs and unders for a reason. That’s the problem with sports betting. I can always figure out roughly who will win, but can I beat the fixed and manipulated odds? Good luck, you’re going to need it. Your not the first person to think of this either, hedge funds are already doing it with tradesports. They bet on more then just sports as I am sure you know.

    Comment by roberto pedone -

  75. hmmm, so….. how can a reg joe get his mits on this….. may be a way to finally have my ship come in, lol

    Comment by Big Jim -

  76. As you mention in your posting, most recreational gamblers go to Vegas expecting to lose, and when it comes to sports gambling, it’s no different. They bet the games to “up the ante” and/or make their viewing experience more interesting, but over the long haul, very few should expect to win any money. As with blackjack players and slot addicts, the thrill is the action, not the potential payoff. For that reason, if you started a fund like this, it would be essential that each “investor” be aware of each bet that is placed by the fund. Additionally, the rules by which both casinos and offshore gambling establishments operate prohibit bets above a predetermined maximum ($5,000 to $10,000 in my experience). As you are aware, any reputable sportsbook knows that wagers above this amount would only attract “smart money”, and that’s exactly what each hopes to avoid. For that reason, if you were to raise a hedge fund of any significant size, how would you lay off bets? In other words, if you’re running a $100 million fund, it’s futile to go around placing $10,000 wagers, all of which have very little impact on the return to your “investors”. Not to mention the built-in “vig” of 10% that you pay on losing bets. If you run the numbers, you have to pick something like 56% – 58% of your games correctly JUST to break even… That’s hardly a slam dunk in my book.

    Comment by TES -

  77. Mark,

    I don’t know if this idea is better or the buzz you are creating. I do believe there is money to be made and do know one person that does make money gambling on sports. I try to learn from him as much as possible. I have been gambling on and off for the past 8 years and overall I am down of course. What has changed for me though in the last 3 months is the knowledge I have gained from this person. And my returns have been very good.

    Picking your managers will be very difficult. So many people throw up smokescreens when it comes to gambling. I like to equate pick services to stock brokers. You should never higher anyone that has had anything to do with a pick service. They are constantly ripping people off just like brokers are everyday.

    Comment by Joe -

  78. If you’re really serious about this offer, email me… my record is, in fact, documented & I’d be more than happy to share it with you.

    Comment by David Wilson -

  79. I LOVE this idea. I’ve been a sports gambler for the better part of 2 years, following strict money management strategies. Honestly, it’s been like stealing. With this success, I’ve truly given consideration to establishing a fund (obviously on a much smaller scale) and managing the money through sports gambling “investments.” You’ve beaten me to the punch, and on a MUCH larger scale. So…do you need an analyst? It would be my dream job!

    Comment by Bob N. -

  80. As much as I love your other views (esp the trashing of Trump who I have derided as a fraud for 20 years) this gambling hedge fund will end in disaster. First off, the stock market is NOT a zero sum game as gambling is. Sure, there a lots of idiots who buy shares in fly-by-night stocks that pay no dividend on just the hope a greater fool will come along. So what? Does that mean you have to lower yourself to literally gambling with a fund? Makes no sense.

    The likelihood of the entire planet ceasing to buy a Coke product for 6 months and cratering the stock to zero is nonexistent. The likelihood of Manning getting up on the wrong side of bed and getting completely killed in a supposedly easy game is FAR more likely.

    Further, your involvement in the NBA will preclude you from getting involved in this AND good luck finding a book to take the kind of size you are going to have to throw around to make this venture worthwhile. The stock market is hugely liquid – sportsbooks are not. Wait and see how you move the line with just a relatively small bet.

    I have been a bookie for 5 years and not ONE of my customers has made money. And they have all the information in the world. Nothing can protect against a crazy outcome (Bucs vs Colts on MNF last year, the Pistons brawl stopping the clock with 45 seconds left and dooming the people who bet the over by 3 points, etc, etc)

    I suspect this is all tongue-in-cheek to point fun at what a casino the stock market currently is at its wildly overvalued level. Of course, it was dupes like these who made you rich.

    If this ever does get off the ground (which I highly doubt) I am willing to publicly wager you $20,000 that your five-year returns will be negative. Sincerely Matt Beauchamp 407-340-2405 – I am serious about the bet.

    Comment by Matt Beauchamp -

  81. Wow. Betting on sports. Why didn’t I think of that? It is rumored that I have some knowledge in this area. Where do I submit my resume?

    Charlie Hustle

    Comment by Pete Rose -

  82. MARK CUBAN !!!
    I read your comments in the newspaper and you are on to something.Seldom have the resources of a billionaire been applied in the sports betting business.Some of it can be coupled with your specialty COMMUNICATIONS.
    I have owned 2 premium SPORTS BOOKS.In my career I have been a pioneer on the bookmaking side,most notably in the field of halftimes.
    Now I am strictly involved only on the player side,but since my chance of getting to speak to you directly are not good,I will put a few ideas for the WORLD to see,you will have my E-MAIL and my identity can easily be confirmed.I spend half the year in NYC and half the year in Vegas and can present a list of concrete proposals in a days notice.

    AS A HALFTIME EXPERT
    I can give you a concrete example.
    The NBA games and major universities are under tremendous scrutiny.
    BUT
    when SIENA plays NIAGARA
    and it is not on TV
    IF THE LINE IS 8
    and NIAGARA is up by 4
    4 will be the 2nd half line !!! PERIOD
    even if 3 Siena PLAYERS leave on crutches and 3 have 4 fouls.
    COORDINATING a group of kids to attend every game and getting quality halftime reports and charting the success of the reporters ,we could form a network with shrewd observers,and destroy the very weak market.
    I have 5 employees and on a small scale we are destroying it.

    RADIO LISTENING ROOMS
    between real player and Yahoo almost all college hoop and pro hoop are available on radio,almost all have pre game interviews with the coaches,sometimes a coach may say either his team is surprisingly banged up or they are going to change the tempo of the game ,making the total of the hoop game radically off.We could organize listening rooms after employees were trained what to listen for.
    They could have stats for the teams in front of them so they would be able to know if a player removed from a lineup would have an impact.
    on the PRO level injuries are the key factor
    it is an ankle and knee problem sport as ,extra long people go up and down on a hard floor constantly doing damage.
    There are many game time decisions.
    1 year Allen Iverson was questionable so many times they would make a generic 76er line.
    It would be 5 when it really was 3 or 7
    We could position ourselves to be first in that regard.
    Baseball is MY SPECIALTY
    with the vig half of what it is in foots or hoops,there are plenty of times where billionaire money when a market is 20-28 ,and we can lay all the 20’s and get the lines past 30 .Especially when we have the lineups first ,which to my knowledge ,I am already in possession of.I pay good money for that service but in 12 out of 15 games i usually have the lineups well before they are posted on Don Best ,which is the industry standard.
    While some of the work I have done with pitchers I consider to be unremarkable ,I have detailed offensive studies which really predict vs the spread how teams will produce.
    Much of what is important in a baseball game as described in MONEYBALL and confirmed by owners who are hiring GM’s to acquire the right type of baseball can be applied.
    Their formulas are based on getting players who provide production on a per season or multi-season baseball,they key betting baseball day by day is to isolate it with a degree of accuracy on a GIVEN DAY.
    I will tell you that on May 26th when trying to bet game 44 a player is who he is
    on a LONG TERM INTERVAL
    over who he is on a short term interval.

    I already have computer guys on the payroll
    and everyday players are fit into a grid and team offenses on a given day vary differently to the spreads.
    There are times when I have a GAME RATED DEAD EVEN

    where you are able to take $ 1. 60
    In a meeting I will show revolutionary baseball ratings.

    I can tell you
    I could not coach a basketball team
    I could not coach a football team
    I could MANAGE a baseball team.

    Anyway those are some concrete suggestions
    I hope someone is in charge of getting this message to you.
    IF you E-Mail me I can pass on relevant information so you can verify my identity before going further.

    Comment by skybox -

  83. Interesting concept. I know there are loads of us already out there tring to make a buck by gambling on sports. I came acroos an interesting site a while back to help the budding gambler get an edge, you may find it helpful. http://www.covers.com.

    Comment by Sean -

  84. I would like to invest in your fund… except I am broke right now. I always lose money in Vegas, anyway 🙁

    -Q of S

    Comment by Queen of Sky -

  85. In response to Ted Buturin’s post:

    I agree with you wholeheartedly about brokerage firms, money managers and the entire “promotional” complex. David Swensen, the CIO of Yale’s endowment fund, remarked at a Congressional hearing last year that there are about a dozen mutual funds worth investing in. Hyperbole aside, I think that he’s absolutely correct. However, taking isolated events such as KMRT and applying them to the whole of the equities market is an extreme and logically flawed position. You can’t be an uninformed active investor or trader and expect to make money. It’s that simple. I certainly feel for pre-Chapter 11 KMRT common holders, employees who lost their jobs and others impacted by the restructuring. But you could just as easily have purchased the bonds (along with Eddie Lampert and Marty Whitman) before the filing, which were converted to common post-filing. Tyco, Enron, Worldcom and other cases of corporate malfeasance and outright fraud do little to inspire investor confidence in corporate America. But the majority of managements don’t engage in fraudulent activity and are concerned most with maintaining and growing their enterprises. There is usually money to be made somewhere in the markets (long or short), whether through investing in equities, fixed income, real estate, currencies or commodities. If you are convinced that the average investor doesn’t stand a chance in choosing individual equities, then you may want to consider an ETF portfolio for your clients that is automatically rebalanced on an annual or semiannual basis, a service which one major online brokerage firm currently provides for 50 basis points/year.

    Comment by Steve -

  86. “As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling”

    The irony in this statement is almost blinding.

    Don’t you get it-that’s EXACTLY what he’s saying; they’re no different, the only “sure” things are bonds.

    It’s meant to prove a point people; take a deep breath and put away your money-making schemes; you’re not going to get rich here.

    He makes a very good point…

    Comment by Jesse -

  87. Enjoy!

    Date placed:
    Dec 01, 2004 3:24p Single
    Basketball – NBA Lines Total
    Game can be seen on YES, Comcast
    (701) New Jersey Nets vs. (702) Washington Wizards Over 184 Wed@7:05p

    Risk $1600.57 to win $1450.97

    Comment by John Camacho -

  88. i’m currently an analyst at a nyc investment firm and i have one question. how do i join?

    Comment by Sang -

  89. Well…say what you will but, Mark Cuban sure knows how to create a buzz. I see USA Today has picked up on this and CNBC is prolly on the phone as we speak trying to line up Mark for a comment or a future Squawk Box appearance. And perhaps ESPN’s “Outside The Lines” is holding on Line 2.

    Oh…and by the way…who would run this fund…Kwamie Jackson ? Too funny !

    Lots of great posts though. The post (I think it was AlexNY) wrt “liquidity problems” was one that I had considered. It would seem betting large sums and moving money in and out would be difficult if not impossible. Not to mention the “footprints” that would be apparent to those that watch the action closely. If you think the hysteria created around MAMA.com, when it was learned that you were a BIG investor was bad…imagine what it might be like in a …ah hem…”gambling” environment. 🙂

    Oh well, I’ll continue to read with interest. It is a cool idea.

    skyfisherman

    Comment by skyfisherman -

  90. Mark… Great idea! Please let me know if you’re looking for help in this venture. I used to work with a guy who managed a futures fund. On the side we ran an NFL betting fund for his friends/family etc… totally legit, betting in Reno casinos. In the three years I worked with him our NFL fund return was greater than that of the futures fund. I’m now a satellite insurance underwriter but would relish the opportunity to get back into the NFL Fund Management business.

    jdclark@thegrid.net

    Comment by James Clark -

  91. Well…say what you will but, Mark Cuban sure knows how to create a buzz. I see USA Today has picked up on this and CNBC is prolly on the phone as we speak trying to line up Mark for a comment or a future Squawk Box appearance. And perhaps ESPN’s “Outside The Lines” is holding on Line 2.

    Oh…and by the way…who would run this fund…Kwamie Jackson ? Too funny !

    Lots of great posts though. The post (I think it was AlexNY) wrt “liquidity problems” was one that I had considered. It would seem betting large sums and moving money in and out would be difficult if not impossible. Not to mention the “footprints” that would be apparent to those that watch the action closely. If you think the hysteria created around MAMA.com, when it was learned that you were a BIG investor was bad…imagine what it might be like in a …ah hem…”gambling” environment. 🙂

    Oh well, I’ll continue to read with interest. It is a cool idea.

    skyfisherman

    Comment by skyfisherman -

  92. Mark-
    I have been a ‘stockbroker’ or a ‘financial adviser’ (for lack of better descriptions) for the last 13 years. Wall Street makes me sick. The average person, who my whole business is made up of, has NO shot in the stock market, and only a decent shot in growth/value funds. I will not let any clients of mine own a stock. There is not one publicly traded company that cares about its shareholders. Look at the shareholders of WCOM and KMart after they declared bankruptcy. They were left with nothing. Now KM has gone on to make a lot of people huge money — except the original shareholders, typically the little guy. Anyone with any knowledge got out prior to the BK.

    The reason that I say most investors have a decent shot in funds, if they own the right ones and there is such a thing, is because the marketing machine of Wall Street does not advertise the ‘best’ funds. Most of the better funds do not advertise, because they do not want the expense, because it costs the shareholders in the long run. However, most clients are not smart or logical, only emotional. They only want to buy what they see advertised and that is typically the garbage product only produced so the fund company can make the huge money. So after many years in business, my book has low turnover because I have fought the uphill battle of teaching, teaching, and teaching my clients to stay on the right track and not to flip in and out of the hot funds.

    The other half of my book is in bonds. And guess what? Within my industry, I was not looked at fondly by my brokerage house because I did not flip clients around, I bought either no-load or C shares, and I had a lot of clients in their 30’s and 40’s in bonds — which are investments that firms don’t like unless you are trading them. All firms want brokers to produce commissions at any cost to the client. We are taught that “moving money around is the name of the game”. I reject that logic entirely, which is the reason that I do not, and will not, work for a large firm.

    It is good to read your sane comments regarding Wall Street because I feel the same as you. Wall Street, CNBC, CNNfm, Rukeyser, and all that crap makes me sick that my normal, ‘hardworking Americans’ have to be subjected to those talking heads without any real desire to give objective, sensible advice.

    Ted Baturin

    Comment by Ted Baturin -

  93. I actually think Mark STOLE these ideas.

    I just finished a book called “Investing in College Basketball” that contains EXACTLY the same arguments. (I got it from Amazon).

    The book talks about investing in college basketball as a stock market where you know more about the stocks than anyone else. Where most of the other investors are amatuers, not professionals. Where there are few frauds like Enron, Marsh, WorldCom or HealthSouth to tank your portfolio. Where investment gains come immediately, not after years. Where there are dozens of brokers keeping commissions low.

    The book also goes into information availability and different kinds of bets (first halfs, second halfs, interactives, etc.)

    Mark, you and the author are so in sync. He should be the manager of your fund!

    Comment by Barry -

  94. Seems they do come out of the woods when a Billionaire speaks of spending money on some bet… Personally Mark, to me the only sure bet is the one we make in our families.

    Christopher
    http://www.lostinamerica.blogs.com

    Comment by LostInAmerica -

  95. Might be interested to read “Bringing Down The House” by Ben Mezrich–an account of how a team of MIT students trained in blackjack strategy sucessfully beat Vegas over the course of several years, making millions of dollars for their investment backers.

    Comment by AW -

  96. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  97. After putting 100g’s on black 31 bc I’m a pro at what I do, I love the idea of bellying up to the cashier at Horseshoe and looking the fat slob dead in the eye and saying,”Listen here jerkey, yeah you, you sloth,”
    then with my dead sexy smile whisper,”I’m with the Gambling Fund, I don’t want any sudden moves. Give me a mil large for my hard work, and a pen to make sure you’re not pulling any funny stuff.” When the greaseball returns the favor, tip him a GDubya, spit in his eye, and reassure him,”I’ll be back punk.”

    Cubes, I own black 31. Sign me up!

    Comment by Medman -

  98. So I’m driving home yesterday and the News and Weather together comes on. What do I hear? Mark Cuban’s name and this blog entry. Granted it must be news as I live in Reno, NV and we welcome any taxable revenue, but I was interested to see what other networks/locations broadcasted such a small item.

    Comment by Patrick Crofoot -

  99. Mark,

    This looks like a good idea, would be interested in seeing how this comes out.

    Comment by Shawn Murrell -

  100. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  101. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  102. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  103. Mr. Cuban, there are wiseguys throughout Vegas making hundreds of thousands in sports bets each and every year. The perception is that the house always wins but their average return is only about 5% annually, by far the lowest out of any games the casino offers. The vast majority of this profit, like you mention, comes from a betting public that knows very little about the teams they bet on, often inflating lines by betting on favorites. Sure your Mavs are going to win the majority of the games they play this year, but will they cover 4,6 or 10 point spreads? Most of the betting public doesn’t differentiate between a cover and a win.

    The key to your project’s success is picking the right managers for this hedge fund. There is absolutely no program or model that will accurately predict winners 60% of the time. If such a model existed, there would be no betting market.

    The right handicapper needs to mix gut instincts with statistical analysis. Rely solely on the former and you’re no better than the betting public that perennially loses. Those that rely on the latter often miss the mental aspects or nuances of a game that go far beyond the numbers. Revenge games, fatigue, home or away are all difficult aspects to quantify.

    Lastly, a lot of people have mentioned starting your own sportsbook. Sure, it’s a profitable venture, but what’s more enjoyable than being the underdog and going after the house??

    Comment by VC -

  104. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  105. Hi Mark,

    I was pleasantly surprised to read your most recent blog entry. This past summer I created a betting hedge fund, complete with prospectus. Unfortunately I was unable to raise enough capital to start the fund. I would like the opportunity to send you my prospectus and speak with you further about your idea. As someone who has invested and worked on Wall Street, I strongly believe that it is nothing more than gambling. I think it comes down to which medium someone has a greater strength in…mine is sports gambling. I look forward to speaking with you further.

    Regards,

    David

    Comment by David Koroghlian -

  106. Gambling bets are binary events. You either win or you lose 100% of your wager (in most cases). It would be impossiple to properly hedge any bet when all you have are binary events which are not related to eachother.
    Another point…why would you want “perfect information” which everybody has? You would have no “edge”! There are too many articles about unsuccesful investors. The fact of the mater is that 90% of professional money managers are worthless. They add no value. There are, however, very competent investors that over the long term have consistent, outsized returns. Most people do not have access to these investors. Including the press.
    Mark, I’m a little dissapointed with the content in your blog. It sounds like something CNBC would write.

    Comment by Mark -

  107. First The Benefactor, now this?

    Try telling successful fund managers who have spent a lifetime returning amazing results that stocks are just “gambling”.

    The only people who make money off of gambling are bookies and casinos. Maybe you should look into investing in Las Vegas instead.

    Comment by Steve S. -

  108. i cannot ascertain whether the hedge fund idea is something you actually plan on pursuing, or just a thought experiment to stoke discussion. my comments are based on the assumption that this is ‘real.’

    i am surprised that someone of your creativity and wealth would consider allocating time and capital to an idea that basically attempts to game a system. the money gained in a winning bet is money taken directly from a losing gambler minus the commission taken by the house. nothing is generated.

    the business opportunities that you have available, due to the wealth and status you have attained, are virtually unlimited. you could actually CREATE value and wealth instead of try to siphon off a few percentage points. if you are short of business ideas, you could start an incubator, or a venture capital fund. it seems to me that starting new businesses has greater long-term potential and will certainly be much more fulfilling for you and your associates.

    Comment by wiseGEEK -

  109. Not sure if you are being facetious or not. If not, you might want to check out the above website. The guy is good, very good.

    Comment by Isaiah Micah Shiloh -

  110. Hey Mark,

    I’m an investor for a well-known, multibillion dollar long-short equity hedge fund, and also a recent graduate of the Stanford Graduate School of Business, where, among other courses, I took a seminar taught by Justin Wolfers (see posting #31) entitled “Market Psychology, Behavioral Finance, and the Impact on Sports Betting Markets.” During this seminar, we were given access to an enormous amount of empirical data and asked to generate hypotheses on ways to make money in a “black box” manner based on numerous years of historical actual performance. I would be happy to share with you the examples that I have from this seminar, which I believe could be just the beginning of this idea’s potential. I would also encourage you to talk to Professor Wolfers directly on the subject (his research has been mentioned in Forbes, among other places). I have a passion for this subject and am convinced, based on this seminar that I took, that there are numerous ways to make money in a very inefficient overall sports gambling market. I have often wondered how I could raise the capital to start something like this, but have not considered it realistic to do it on my own. I would be interested in discussing it with you if you were interested. Feel free to reach me at any time to discuss.

    Comment by A Very Interested Reader -

  111. Gambling has always been better than the stock market, Mark. When you lose in the casinos the dealer at least has the decency to look you in the eye.

    Good luck with Stern on this one.

    Comment by Jevin -

  112. Hey Mark, you like danger and adventure, how about investing in a sports car company? A car that can go 200mph, with a 2000hp, V-12 engine, and a million dollar price tag.

    Comment by Darryl -

  113. I would recommend setting up or investing in a legitimate US-based futures exchange, by filing with the CFTC. Based on my research thus far, such an exchange would have to argue that the sport events-based futures/options contracts that people would hedge/speculate on are legitimate risk management tools for a significant number of enterprises. An endorsement from you in support of their CFTC application would be very meaningful to that exchange’s argument.

    sourabh niyogi

    Comment by Sourabh Niyogi -

  114. Mark,

    Great blog!! I read as often as possible and noticed that even Yahoo has taken interest in this entry, so now I am curious how much this trouble you stirred up with Stern..Let me know where I can sign up.

    JB

    Comment by Jbsmoothh -

  115. I am with the few people around that have posted. I think it’s Mark’s way of pointing out the craziness of buying into a Hedge Fund.

    I could be wrong, but I am pretty sure Mark is just trying to open your eyes before you leap into investments. I am with the minority on this one, its NOT REAL!

    Comment by Scott -

  116. what i love is the amount of people that are warning mark about the SEC, the govt, and david stern. call me crazy, but i think he has already taken those factors into account. but by all means, continue to point out things he already knows. and i’l get capt obvious’ car warmed up for the ride around town.

    Comment by John -

  117. Hi Mark … I am an aspiring professional sports bettor … Hire me because I’d work for free! P.S I just won 3rd place in a sports betting contest. Thanks.

    Comment by Marc -

  118. I’ll make you more money than ANY hedge fund.

    Comment by David Online -

  119. Would not the league frown upon your involvement with a fund that very well may WAGER on NBA BASKETBALL?

    Comment by David Archer -

  120. I am sorry but after reading these comments I had to go back and read the entry for the third time!
    I am amazed at how many people took it seriously!

    Comment by Amazed -

  121. Hey Mark,
    I’m a professional in the hedge fund industry and would like to make the following observation regarding your comments: you’re describing the sports bet market as having all the attributes of an efficient market (full transparency, availability of information, etc…) and the stock market as inefficient (low transparency, not enough regulation, etc…) however, smart investors make money in stocks PRECISELY because markets are inefficient, not the other way around. Since companies “massage” their numbers, don’t disclose all their information, traders get emotional, etc…good and thorough analysis can enable an investor to bet right on a stock, in essence “reading between the lines” of financial statements. If markets were efficient, all available information would be instantenously priced into a stock at all times, so there would be no opportunity to profit from msipricings (as hedge fund managers do).

    Moreover, markets that are more transparent (like global fixed income and currency markets) offer less arbitrage opportunities precisely because the information is available to everyone easily (anyone can look up US GDP on bloomberg).

    In any case, good luck with your fund, I look forward to hearing more about it!

    Comment by Jean-Philippe Odunlami -

  122. I really like your idea, but i think that many others have had the same idea (and have been acting on it) for a long time now. Those people are well aware that gambling is a Zero Sum Game (actually worse because of the vig), and the only way to consistently make money is to consistently take it away from other players. So, the fact that “there really is far better information about your local sports team than there is about any local business in your market.” (your words) is not of primary importance. Of more relevance would be your ability to get information that other bettors don’t have.

    The most obvious strategy is to influence the outcome of an event after you place a wager on it. This is attempted, with varying degrees of success, in countless different universes. Insurace fraud is one simple example of that. An example in the news today would be the manipulation of the upcoming shareholder vote in Mylan Laboratories’ by hedge funds who have an economic interest in the result of that vote but no net economic interest in Mylan itself (much to Carl Icahn’s chagrin).

    Powerful people such as Yourself and Mr. Icahn just to name two, have a great advantage in their ability to influence outcomes. This is an area in which you truly have an “edge”: your own knowledge of what you intend to do in the future. I would guess that represents the best opportunity for those fortunate enough to be in a position of power. It is likely easier to hide your intentions and cover your tracks in areas outside of “Wall Street”, such as sports betting, and that might be the reason that your idea makes sense. The SEC, Elliot Spitzer, etc are watching the financial markets more closely than ever- why not move into an area which has yet to fortify itself against manipulation?

    Finally- your comments about the payout ratio are factually incorrect, and i would hate to think that some average joe is going to lose his money in Vegas because a billionaire gave him an erroneous lesson in stats. If you play a slot machine with a payout ratio of 97% or 98% for a long time, the Casino ends up with ALL of your money, not a mere 2-3% as you state. The 2-3% is the average amount lost by the player PER PULL on the lever.

    Your conclusion about the cost of placing bets using financial derivatives is based on your mistaken notion, so naturally the conclusion is mistaken as well. In fact the exact oppposite is true: Financial derivatives that are freely traded (such as the IBM options you mentioned) are extremely efficiently priced, and therefore are very inexpensive means of placing bets. It is harder than ever to make money trading these things because it is harder than ever to get a clear “edge” (legally or otherwise) over the other players.

    Anyway, best of luck with this- whatever the outcome, i’m sure it will make a splash

    Comment by no one important -

  123. Cuban,

    Of all these posts I’m surprised nobody has mentioned your sneak pat on the back to NFI. That and your proclamation of loving bonds. It makes me wonder how invested you are in the stock as it behaves somewhat like a high-yield bond without the junk (except when false and misleading information is printed about it by a certain supposedly venerable financial rag). Perhaps you mention it because it is consistently one of the top 10 most visited Yahoo stock message boards.

    Comment by NicholasK -

  124. Hi Mark,
    All these people looking for your money Mark!All these “so called” experts. I’m only an expert in software development, so I can’t help you. Good luck though in your venture!

    Comment by Michael -

  125. Love it!

    You’ll have to get special exemptions from the casinos to handle the size of your bets. The sports books are operated as loss leaders to get people into the casino but they are not designed to handle huge amounts of money. Furthermore, they simply stop offering certain types of bets if they lose money on them.

    For instance, In 2002 Golden Nugget stopped offering regular season over/under win totals in for NFL after their best season was an $800,000 loss. They couldnt set the win totals properly (i.e. San Fran Niners to win over or under 5 games this 2004 season is good example) so they just quit offering the bet. the pros kept cleaning their clocks!

    I think your point on local teams is great one. Getting an edge is easier with local teams/small cap companies where you can have an edge vs. the national point spread setter (generalist small cap portfolio manager) responsible for setting lines every day and unaware of nuances with an obscure team. Again you run into a liquidity problem – you cant get enough money down on the game and you dont have enough dumb money betting Miami of Ohio basketball on a monday night so the casino cant lay off your bet. At some point the casino will just stop taking bets.

    I think you can get this edge in small cap stocks because

    1)you can get that same knowledge level through conducting primary reasearch through gerson lehrman (you should buy them) tlaking to doctors about drugs or purchasing managers about retail and

    2) you can get enough money down on your bet to justify running a $1B fund and still stay in small cap land

    3) Enough dumb money to take other side of bet. Tons of small cap long only managers who have to follow 1000-2000 companies by themselves with no specialist anlaysts to help get expertise on specific sectors. They cant possibly know as much as hedge funds who hire analyst to follow 50-100 names only. But there are enough mutual funds, long only, (with approx $6 trillion in assets vs. maybe $800B-$1trillion in hedge funds) to where you have the dumb money to take the other side of your bets. i.e. Krispy Kreme (KKD). Hedge funds shorted for years and finally won the bet while growth funds owned it and took the other side of the short bet… and lost.

    Best of luck – would love to talk abou this. Mavs fan, Dallas native stuck in NYC waiting for Knicks to get beaten down on the 21st! out

    Comment by AlexNY -

  126. Mark,

    I’m the webmaster for TraderWizard and SecurityTraders and WinningStreak always knew that Sports Betting was more fair than the Stock Market but now you’ve said it, and very eloquently.

    I’ll devote WinningStreak.com to your plan and my time and resources.

    Regards, Aaron

    Comment by Aaron Day -

  127. Mark,

    Great Idea with huge potential.
    I sent you an email regarding our site, http://www.wicked-picks.com.
    We provide our members with picks from the nation’s best handicappers for any & all sports.
    We’ve been able to provide consistent winners, as we use the “two heads are better than one” philosophy by getting a host of picks from the expert cappers…then analyze them for strength and consistency.
    We would be happy to offer our services to the fund and it’s success.
    Best of Luck with this endeavor!!!
    Jay Rabalais
    wicked-picks.com

    Comment by Jay Rabalais -

  128. I want to manage your Pai Gow Poker Portfolio. I beat my mommy all the time.

    Steve Jeltz 4 Life.

    Comment by kevin Cooper -

  129. I lost to a woman with Jack-Five offsuit.

    How ’bout those cowboys?

    Comment by b-lud -

  130. Noone gambles. Everyone trades.
    http://www.betfair.com

    Comment by nuff said -

  131. interesting concept,but why a hedge fund? if you are doing it with your own money, just hire a couple of ‘experts’, fund an account and set up a small office in nevada and give it a whirl-david stern would probably watch it like a hawk, but i don’t think his oversight would be near as oppressive as the SEC if you were to go the hedge fund route…if your intention is to attract outside capital to fund this venture, if you went with a small-cap IPO, a lot of maverick fans could participate who would not pass the ‘accredited investor’ test for the hedge fund

    Comment by tom pendleton -

  132. I think the idea sounds NEAT!!!!!!!!

    Comment by Gregg Soeder -

  133. I had this idea last year.
    you can leverage the spreads in the sports industry
    because they are not as tight as banking/trading etc
    and treat prices and do the technical analysis the same way
    as other financial vehicles

    Comment by chris fox -

  134. I have been in the sports handicapping/investing business online since 1996 with an exclusive focus on college sports.

    I have envisioned having several sports handicapping funds each with its own set of guidelines (i.e. low risk, high risk, college basketball totals, college basketball money lines, college basketball underdogs, etc, etc.)

    This would once in for all bring legitimacy to the sports handicapping world and the handful of hard working honest guys out there like myself. Instead of claiming great records and win percentages, handicappers could simply point to the performance of their fund. An investor in the fund would have the advantage of getting the best lines and built in money management. There are also sportsbooks out there who do not mind winners, they like the high volume. It is a win-win for everyone involved. Also, it is a lot more fun for investors to track the results of sporting events that it is to watch stock quotes come in all day. Much more entertaining action as Mark eluded to.

    I LOVE the idea. I bought the domains SportsFunds.com, BetFunds.com, BettingFund.com, SportsBettingFund.com, SportsBettingFunds.com years ago but I have always been concerned of legal issues.

    Mark, I would love to exchange thoughts and ideas on this with you. It has been in my head for years. Do not hesitate to contact me.

    Cordially,

    Edward
    Handicapper.net

    Comment by Edward Golden -

  135. I would be very curious Mark to find out how you would select your ‘managers’ for this hedge fund. Would you create an open competition to find the best sports cappers? There are thousands of people who promote themselves on the web or tv & brag about great winnings, however very few actually post their track record or allow an ‘independent’ 3rd party to monitor their results. Would love to hear how you would form your ‘sports braintrust’.

    Cheers,

    George

    Comment by George -

  136. I like this idea and I am in contact with some math/statistical whizzes, who also have a passion for sports and betting. Please let me know if you follow through with this idea, I would like to read some more information on it. Thank you

    Comment by Stephen Butkovich -

  137. I’m in! I’m tired of driving to Shreveport anyway.

    Comment by Daily Texican -

  138. Mark, interesting quote that ties in with your thoughts: Gambling and money management are the same. In each the goal should be to spread risk, avoid becoming emotional, and focus on the odds. An investor succeeds by hitting singles and doubles-not by going for the fences. In fact a home run is a sign of a mistake, because it deviates too far from the mean. “Vegas taught me I could beat the system with a combination of hard work, ideas that no one has thought of yet, and the ability to tolerate a constant routine that to many people seems monotonous”, “but to me its the most exciting thing in the world”–Bill Gross

    Comment by Jamie Lissette -

  139. Please hurry up and post another fine entry in your blog, Mr. Cuban. I’m sure your Hedge Fund is going to be great, I just don’t understand it.

    Dude, write about fighting Pacers or rip on Trump some more!!! Ya know, something I can understand.

    Comment by Paul Pate -

  140. How novel that you think a ‘betting’ hedge fund is better than the stock market.
    Try to remember how you became a Billionaire. Thank the stock market for your success!

    Comment by Susan -

  141. How novel that you think a ‘betting’ hedge fund is better than the stock market. Try to remember how you became a Billionaire. Thank the stock market for your success!

    Comment by Susan -

  142. Comment 218 said:
    “In the stock market everyone can (in theory) win whereas a bet requires a loser.”

    All bets require a loser, including in the stock market. The difference between a bet in the stock market and in a casino is the duration & dimension of the bet. Lots of people made money during the 90’s bull market on paper … and it stayed on paper! There were sellers; there were buyers!

    Most losers lose because of self sabotaging beliefs. And others, entertain themselves by losing. Winning is something that winners do. In the end, it all balances out.

    Black-scholes model does not account for trend. Cuban, the payout in the markets is much greater. It depends on how one exploits a developing trend, similar practices to ones useful in poker. Poker has to do with assessment of pot odds, reading tells and waiting for a good game to develop. Human nature at play in both gambling and the markets, but in the end the rules are more favorable in the biggest casino of them all – the markets.

    The payout is greater in the markets because everyone comes expecting to win!

    Markets can pass tests for randomness and also provide profits for smart money.

    -Homer

    Comment by Homer -

  143. Fine points about the stock market.

    But you can take it one step further.

    Forget about LEAPs. If you find options that provide enough leverage, all you need to do win in the correct ratio. You have 10 $1 bets on stock options. 9/10 of them lose 100%, but the tenth one makes $11, you just made your 10%.

    David

    Comment by David -

  144. Your’re so right that Wall Street is the largest casino in the world. There is no question about it. Nicholas Darvas wrote a book called Wall Street: The Other Las Vegas. This book was written in the 1960s and to this day Wall Street continues as a legal casino filled with dealers and the so called anal yeasts “analysts”. I believe that when these so called “analysts” upgrade and downgrade a stock there is an alternative motive to it.

    I believe that in Wall Street people know information and trade on it before the public knows about it. Yes, buying and selling on “insider information” is illegal, but I truly believe it goes on, every single day.

    Let me give you some recent examples as to why I believe Wall Street is a largest casino in the world.

    There was a stock named Travelzoo that went from $7.50 to $110.62 in a matter of months. That is over 1400% increase. This company was a an internet publisher of travel offers. Why did this stock do that? Well you wouldn’t know it at that time the stock went up that much.

    A few months later the reasons started coming out.

    Travelzoo Discloses SEC Inquiry, Stock Flies South

    SEC’s Travelzoo Probe Comes at a Bad Time
    SEC Traveling to Travelzoo

    These things happened in the 1950s when Darvas first started writing his book and it happened before and it will continue to happen. With the Darvas method I was just like an insider without knowing anything about what was happening just as Darvas was in the 50s.

    I follow his method very thorougly and you can find my blog entries at

    http://www.darvasmethod.com/

    Aaron

    Comment by Aaron -

  145. Your’re so right that Wall Street is the largest casino in the world. There is no question about it. Nicholas Darvas wrote a book called Wall Street: The Other Las Vegas. This book was written in the 1960s and to this day Wall Street continues as a legal casino filled with dealers and the so called anal yeasts “analysts”. I believe that when these so called “analysts” upgrade and downgrade a stock there is an alternative motive to it.

    I believe that in Wall Street people know information and trade on it before the public knows about it. Yes, buying and selling on “insider information” is illegal, but I truly believe it goes on, every single day.

    Let me give you some recent examples as to why I believe Wall Street is a largest casino in the world.

    There was a stock named Travelzoo that went from $7.50 to $110.62 in a matter of months. That is over 1400% increase. This company was a an internet publisher of travel offers. Why did this stock do that? Well you wouldn’t know it at that time the stock went up that much.

    A few months later the reasons started coming out.

    Travelzoo Discloses SEC Inquiry, Stock Flies South

    SEC’s Travelzoo Probe Comes at a Bad Time
    SEC Traveling to Travelzoo

    These things happened in the 1950s when Darvas first started writing his book and it happened before and it will continue to happen. With the Darvas method I was just like an insider without knowing anything about what was happening just as Darvas was in the 50s.

    I follow his method very thorougly and you can find my blog entries at

    http://www.darvasmethod.com/

    Aaron

    Comment by Aaron -

  146. Maybe you’d like to look at this prediction engine based on fractal models:
    http://balduran.ath.cx/blogs/htsrv/trackback.php/24

    Comment by Luis -

  147. Very entertaining and apropos. However, you got the meaning if ‘efficient’ wrong. The markets might be good, bad, full of fraud or not, but that has nothing to do with efficiency or inefficiency. In fact, they’re quit efficient at transferring wealth between individuals, which I think is their purpose for existence.

    Comment by Bob -

  148. There is a difference between Vegas and Wall Street. Gambling is, at best, a zero sum game; for every winner there is a loser. OTOH, companies use money they get from the sale of stock to build new products and industries, essentially making value from (almost) nothing. In the stock market everyone can (in theory) win whereas a bet requires a loser.

    People only lose money in the stock market for two reasons: greed and stupidity. Just by using your head and tempering your lust for money, you can find safe investments that get you decent returns. It’s only when you let temptation compels you to invest in a company with shady finances or one you know little about that you start taking real risks.

    Of course, what do I know, I’m not the one that owns the Dallas Mavericks and has enough free cash flow to start a hedge fund on the side! 🙂

    Comment by Logan Bowers -

  149. Mr. Cuban, I already have, in essence, a small scale sports hedge fund. Contact me if you are interested in learning more. Plus you (and anyone else interested in this idea) should visit http://www.tradesports.com, a fascinatng sports trading site.

    Comment by Bill Glavin -

  150. Lets not forget the obvious here Mark. The game is gamed. Just like business, the incentive to cheat is enormous. And like business I think you can analyze the game, see the action on a macro level and take advantage of it. Will you be offering a hedge mini fund so that poor folks like myself can take advanatge of it? What will be the investment mins for this fund?

    Comment by Jim O'Malley -

  151. The 1,000,000 challenge.

    OH, AND YOU CAN MAKE THE CHALLENGE INTERESTING BY GIVING 100,000 TO 5 STOCK TRADERS. AND, WITHIN 30 DAYS, THE BROKERS HAVE TO INVEST THE ENTIRE 100,000 AND SEE HOW MUCH MONEY THEY MAKE OR LOSE DURING THE COURSE OF THE 30 DAYS.

    Comment by G. C. Pick -

  152. I am a member of the Chicago Board of Trade where I have traded financials for many years. The markets have changed and some of the short term approach to trading has altered your statistical odds. I have some ideas about applying market ideas to sports. If interested shoot me an E-mail.

    Comment by Emil Jordan Stiles -

  153. I am a member of the Chicago Board of Trade where I have traded financials for many years. The markets have changed and some of the short term approach to trading has altered your statistical odds. I have some ideas about applying market ideas to sports. If interested shoot me an E-mail.

    Comment by Emil Jordan Stiles -

  154. BigMindSports.com Reveals Real-Time Online Action!
    A Major *Paradigm Passage has occurred at BigMindSports.com!

    BigmindSports.com has been online since 2004. We are striving
    to become the premier Sports Handicapping and Information resource on
    the Internet today. Just as information availability
    changed the stock market world from a brokerage
    business to an online marketplace, the handicapping and betting world is changing as well. Sports Investors have historically engaged in betting transactions without applying
    the immense power of the information revolution. With
    the advent of the Internet we now have the ability to
    share information about our innovative handicapping knowledge with
    the universe of sports investors throughout our city, our
    state, our nation, and the world.

    In an effort to stay at the forefront of this
    *paradigm passage, we are proud to reveal the next revolutionary
    leap to bring maximum profitability to those who have
    already experienced first-hand the effectiveness of our
    online handicapping. We are very excited to announce
    BigMindSports.com’s http://www.handicapactionlive.com, bringing a
    real-time action format to our handicapping and information
    service. The bland, lifeless handicapping narratives of yesterday
    will be replaced by an energy-filled, real-time online
    action! YOU MAKE THE CALL! Just as winning brings elevated excitement and accelerated satisfaction to you, we anticipate increased excitement in your handicapping and betting
    transactions using the real-time action format.

    *A paradigm is a body of thought and the set of
    assumptions, concepts, values, and practices underlying that body of thought. We all
    understand how betting works but the world is changing and so are your options for handicapping, betting and winning sporting contests
    !

    1. One that serves as a pattern or model.
    2. A set or list of all the inflectional forms of a word or of one of its grammatical categories: the paradigm of an irregular verb.
    3. A set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline.

    Comment by Steven L. Kistner -

  155. Mark,
    I had initially responded to your Hedge Fund Blog back in November. It never appeared on the site – my bad! Nevertheless the content contained therein related to my expertise in the realm of statistical and formulaic analysis. I have developed consistency undermining the “so-called” experts. I can be an asset to the future success of the Hedge Fund endeavor.

    Comment by Steven L. Kistner -

  156. Mark,
    I need your input and a little help launching this concept associated with your HEDGE fund.

    BigMindSports.com Reveals Real-Time Online Action!
    A Major *Paradigm Passage has occurred at BigMindSports.com!

    BigmindSports.com has been online since 2004. We are striving
    to become the premier Sports Handicapping and Information resource on
    the Internet today. Just as information availability
    changed the stock market world from a brokerage
    business to an online marketplace, the handicapping and betting world is changing as well. Sports Investors have historically engaged in betting transactions without applying
    the immense power of the information revolution. With
    the advent of the Internet we now have the ability to
    share information about our innovative handicapping knowledge with
    the universe of sports investors throughout our city, our
    state, our nation, and the world.

    In an effort to stay at the forefront of this
    *paradigm passage, we are proud to reveal the next revolutionary
    leap to bring maximum profitability to those who have
    already experienced first-hand the effectiveness of our
    online handicapping. We are very excited to announce
    BigMindSports.com’s http://www.handicapactionlive.com, bringing a
    real-time action format to our handicapping and information
    service. The bland, lifeless handicapping narratives of yesterday
    will be replaced by an energy-filled, real-time online
    action! YOU MAKE THE CALL! Just as winning brings elevated excitement and accelerated satisfaction to you, we anticipate increased excitement in your handicapping and betting
    transactions using the real-time action format.

    *A paradigm is a body of thought and the set of
    assumptions, concepts, values, and practices underlying that body of thought. We all
    understand how betting works but the world is changing and so are your options for handicapping, betting and winning sporting contests
    !

    1. One that serves as a pattern or model.
    2. A set or list of all the inflectional forms of a word or of one of its grammatical categories: the paradigm of an irregular verb.
    3. A set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline.

    Comment by Steven L. Kistner -

  157. This product is interesting and the debate could go on and on. From an academic standpoint, I’m sure there are lots of quantitative methods that could be proven or just simply applied through various types of analytical software. However, this is probably a capacity constrained product with high risk due to the diversification parameters. Regardless of the “hedging”, there is still risk with respect to unknown correlations and also human factors (player injury, illness, personal problems, or other non-statistical factors). How does one match the qualitative and quantitative attributes to mitigate the standard deviation? I just don’t see institutional interest in this type of product. It sounds very academic and not very practical for generating a profit, however, it does sound like a “fun project”.

    Comment by DG -

  158. Mark, I believe your hedge fund would be an excellent way for people to take a real risk and get an almost immediate return or loss. Which ever way the dice rolls. I have been hearing so many good things about you. The way that you conduct business is awesome. I work for a company that deals mainly with the racing industry. This company wants me to manage all of their out of state stores, because they told me they have never had anyone work as hard as me. The only thing I am having a problem with is that they want me to put a plan together for the next two years, but they are not allowing me the time or assets I need to put it together. When they approached me with the offer I said, Yes. I would have no problem with this except they with will not let me research any of the profit and losses of the stores, because I have to do my normal job which is recieving and pulling very large parts orders. What would you recommend I ask from them so that I could put a plan together. Thank you very much for any advice given.
    Justin (21)
    Allen,Tx

    Comment by Justin Slocum -

  159. Mark,

    Although I follow your logic, you seem to forget that the “smart money” in the stock market doesn’t trade day-to-day and attempt to exploit the “inneficiencies” you speak of. If you diversify and hold for the long-term you’re going to make about 10% on your money. Look at any long-term period in the stock market in general and that’s what you get.

    Diversify and play your money for the long-term in Vegas and you lose every time.

    Don’t get me wrong. I enjoy the thrill of looking for inefficiencies in the stock market and the thrill of gambling in Las Vegas, but I consider them both recreational.

    Well, if you actually read through this, I would appreciate a response. I’m involved in a startup right now and would love to get your input.

    Comment by Jeremy Lyman -

  160. As a professional poker player, I can definitely tell you that backing in poker is the only way most of us can afford to play the tournament trail. To play all the events at the World Series of Poker this year would cost just over $125k. And all the major tournaments for the year, you’re looking at over $600k…

    But if you or anyone else is serious about wanting to back some poker players, I’ve got a crew with a pretty good playing record.

    Cheers,
    Dutch Boyd
    http://www.dutchboyd.com

    Comment by Dutch Boyd -

  161. I have participated in a small, friendly gambling fund based on the NFL over this past season. We basically do what My Cuban wrote about in this post. Besides being up for the season, it has also been a ton of fun to participate in every week.

    Comment by Tim -

  162. Sorry, but this just won’t work in a size large enough to have a decent-sized fund.
    Betting limits are low compared to the stock market, and even if you “spread the action around” (i.e. Vegas, the islands, Europe, Australia), each sportsbook watches the line moves at other books, with many adjusting their numbers to stay in line with the major books.

    Moreover, even if one could bet large enough to generate a positive return, this would only last for a short time.Here’s why:
    Several years ago a group of sharp bettors took the “edge” from the casinos on totals wagers (over/under bets). The casinos responded by lowering the limits to $300 and then many would only take totals wagers in parlays until the edge was recovered.
    So, what’s going to happen with this “fund” is that it will generate profits, but they will be relatively small and increasingly diminishing.

    As a resident of Las Vegas and a bettor for many years I have had the opportunity to watch the sportsbooks adjust. They simply won’t allow you to win millions for very long.

    Now, let’s assume you treat this as a market like Tradesports. Well, I’m sorry Mark, but that’s just plainly illegal as it involves interstate gambling activity. The Wire Act and many associated cases have clearly established the illegality of this. I have the case law.You can’t even legally place an offshore bet from Las Vegas! Basically, the cases establish that “if it looks like gambling, no matter how well disguised, then it IS gambling.”

    Going further, what I’m saying is that Tradesports and every other betting site, whether person-to-person or otherwise, is violating US law.
    So, why not take the operation offshore? Well, the law clearly establishes the US maintains jurisdiction over it’s citizens anywhere in the world.
    Consequently, you are left with establishing an offshore fund that only places bets in jurisdictions where sports betting is legal, and doesn’t accept or place wagers (or whatever you’d like to call them) from/ to any US location. It just seems too difficult.

    Even if you set up the fund in Nevada, the actual placing of wagers would seem to involve “messenger betting” in violation of Nevada statutes.
    Finally, even if you manage to overcome all this, there are tax problems. It is likely that the expenses associated with this “business” are not deductible. I believe there is a US Supreme Ct precedent, but don’t hold me to that one.
    Now, to each individual’s personal return:
    Gambling winning go directly to the income side, while gambling losses are only deductible as itemized expenses. I find it difficult to believe you can treat this operation as an LLC or other entity for federal income tax purposes, issuing a K-1 to each fund participant. I don’t think the IRS will buy this
    being treated as a business.

    Comment by Barry Pozmantier -

  163. you experts can have a free shot here. Go teach them a lesson

    Comment by matey -

  164. Mr. Cuban,

    The horse races can be beaten. There are a couple very important ingredients. Contact me for the details.

    Comment by jeff -

  165. Interesting concept, wondering how hard of a sell it would be to people though..

    Comment by Texas Holdem King -

  166. Mark,
    Will you have the NBA as part of your fund action? If so, I have a solid NBA Selections record and could add solid returns to your fund’s bottom line.

    “The Mathematician”

    NBA Predictions via Statistical Formula

    NBAselections@aol.com

    Comment by Nick L -

  167. Main problems, Limits on wagers, and line movements off smart money. . Making large enough wagers into soft or bad numbers to run a hedge fund will be impossible. Sure you can get down big on nfl football after the openers have been beat up but by then the potential for value is small. Other sports have smaller limits and casinos will move the lines when the sharp money comes in. You will need a special arrangement with the books to get this oof the ground. In theory it is a great way to make money as sports wagering does present great investment potential to the sharps its just that applying that to the hedge fund model does not work in the current las vegas enviroment

    Comment by greg -

  168. I’ve actually been following the sporting lines very closely for the past year. I’ve come up with criteria for selecting specific teams and a point value system. I’m a sports fanatic and read sports about four hours plus a day. I’d love to be apart of this team. Let me know.

    Comment by Neema Yazdani -

  169. I actually flirted with this idea about a year ago. I did some research and found a bunch of software companies who were pitching programs that claimed to identify arbitrage opportunities. It looks like the biggest problem is that the size, or lack therof, of the overall market limits the abililty to make large profits on any one trade and therefor puts a cap on what any one individual can earn. The companies pitching the arbitrage software were doing so because they could’t solve the problem of how to make one person working full time earn much more than 60,000 per year. I am guessing that this wasn’t enough per capita to cover the operating costs and a resonable profit margin to run a full time arbitrage fund. They probably found it a better strategy to empower lots of individuals and to create a reoccuring annuity. Which I would say they probably are doing quite effectively especially as you can only buy the software with a license that renews annually.

    I guess If you can address that problem you will have it made. Interestingly enough this is almost the same problem that any successful hedge fund runs into. Once their capital gets big enough they become to big for a lot of the very profitable opportunites. They all end up either disbanding or trying to leverage things on a macro scale like the currency speculations,etc… that we see many of the big funds dabbling in.

    my 2 cents…

    Comment by ATS -

  170. Mark,

    I had the opportunity to interview with you back in the early days of audionet. My company was looking to advertise and we were considering spending our ad money with you. After talking, listening and agreeing with you and your visions (and you offering me the chance to join audionet) I made a tough choice and declined your offer. I have regretted my decision ever since my old boss decided “web site e-commerce was not the future” in 1998 and closed our company.

    I’ve read your blog (and many of the responses here) and fully believe this would work, be profitable and attract investors. Let me know when you are accepting resume’s. I want an employee number in the low teens this time around.

    Tim Weis

    Comment by Tim weis -

  171. Mark,
    I’ll drink what you’re having 🙂
    Besides you’re a billionaire… anything you touch will turn into multimillions. It’s a good idea, a little eccentric for my taste but if anyone can fly with it, it’s definitely YOU!!!

    Comment by Bob Pittman -

  172. I dont know squat about the stock market, however at 44 years old I am looking for something to invest in to make some money and to secure my future. Where is the best place for the small investor to invest in funds?

    Comment by Bud -

  173. Speaking of gambling hedge funds…

    http://www.sec.gov/litigation/admin/ia-2316.htm

    …..The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”), against Fanam Capital Management (“Fanam”), Richard J. Ennis (“Ennis”), and Seth Morgulas (“Morgulas”)….

    …..Beckford’s Fraud
    6. Beckford gambled with investor money, traded outside of the Fund’s objectives, and paid himself money to which he was not entitled, resulting in investor losses of $4,828,129.

    7. Beckford started gambling with investor money in February 2001. Beckford used the Fund’s money for gambling activities in Lake Tahoe, Las Vegas, and Henderson, Nevada, at horseracing tracks and off-track betting parlors around the country, and on sporting events over the internet. For example, on December 17, 2002, February 7, 2003, and March 7, 2003, Beckford wired $150,000, $243,000, and $307,000, respectively, to the Bellagio Hotel Casino in Las Vegas from Fanam’s brokerage account. Beckford lost the majority of the money sent to the Bellagio by gambling at its casino and on its sports book, and he lost some of the remaining money gambling at other casinos. Beckford also used Fanam’s money to finance his gambling trips. Investors paid for Beckford’s airfare, rental cars, and hotel rooms. In total, Beckford lost $776,344 of investor money through his gambling losses and travel expenses…….

    http://www.xhedgefund.com

    Comment by Hedge Funds - Xagua Consulting Services -

  174. Mark,

    I have run a hedge fund for 3 years now and worked for 2 prior. I would be interested in chatting and sharing ideas if you care. There are several questions that I am curious about. Who would act as a prime broker to custody assets and act as your official books and records. People get very funny when they can not check to make sure their money is still there. What type of investor communication/transparency are you looking to provide and what type of risk management techniques are you looking to employ. Lastly aren’t there any restrictions related to sports betting that you may be restricted on (the thought of Pete Rose comes to mind). You have a very interesting idea. Mail me and we may be able to teach each other something.

    Dan Dykens

    Comment by Dan Dykens -

  175. Mark…Its about time ! this is the real world and everything evolves around money and life is a gamble . I would love to work with you. I have been a sports fan all my life and see the real value in Sports Betting Funds.

    Allan

    Comment by Allan P -

  176. Fantastic blog. For years I have agreed with Mr. Cuban’s assessment that Wall St. is just a form of legalized gambling, especially with the advent of online trading over the past decade. How are my positions in Lucent, Urban Outfitters and Open TV different than my opinions on the Atlanta Falcons or the Buffalo/Cleveland over?
    Even more intriguing is the concept of sports betting being an investment tool. For over twenty consecutive years the Boston Herald’s IM Bettor has posted a winning season in football. Consistently technically savvy handicappers like Big Al McMordie, Mike Orkin, and Donnie Black have also posted varifiable profitable years, how is this possible? A consistent and disiplined money management program coupled with extensive analysis and an understanding of the marketplace psychology will produce results. This is the exact same mantra of Investment Gurus. Opportunities abound whether it be Patriot League basketball, Sun Belt Conferance football, or the over 5,000 Major League baseball games a year – not to mention athletic contests outside of the US. It’s all about working the information at your fingertips, being patient finding a favorable play and exploiting it.
    My only question is will the amount of money wager placed be accepted? Unlike the Stock Market sports books can limit the amount of action accepted. Not every book will have the same line, and obviously due diligence must be followed as every half point, or percentage of vig is precious.
    Mr. Cuban the idea and it’s non prejudiced, forward thinking is spectacular. Should you be looking for any kind of help on this venture now or in the future, I would love to be a part of this project in any capacity.

    Comment by Andy Rouvalis -

  177. Pretty Smart Mr. Cuban….I am on to you…I am going to start my own gambling hedge fund…ITS CALLED the Apprentice Bet….Did I read between the lines right in your blogentry /1916803934624335/….Is Jen going to win? I like the Ken and Barbie anaology….I guess you got the insider information……

    Or wait..If it is live….how can you know the results??

    Comment by Sterl -

  178. Had a similar idea a few years ago, but I was thinking bigger. Mutual fund instead of a hedge fund. I realize now that a hedge fund is a much better idea. You would probably have to take it overseas, no way DOJ or SEC would allow it in the US. Hire only statistions and math geeks to write complex computer programs. Biggest advantage I see is the arbitrage opportunity, you could make a killing here. Largest obsticle (except for the legality and conflict of intererst issues, which are obvious) is that you would be a market marker. These bets would swing he entire gambling market and move the point spread SIGNIFICANTLY. What I am trying to say is, no one is going to take the bet. Anyway, good luck. I think the US is probably about 5-10 years away from this idea…..Personally, I think you are just pissed off at corporate American and their reporting practices. Remember it is the lawyers who make the reporting laws, corporate management just works with what they have.

    Comment by Andrew -

  179. For all these double up theories, I am willing to bet you won’t last 1 month using this theory. There is no guaranteed to win play. You will see 10-15 game winnning streaks and losing steaks. You would be better off betting $1 and doubling every time that you won. Have you ever heard that you only have to double $1 twenty times to have 1 million dollars. If you do gain a statistical advantage, you are better off wagering the same on every game and grinding out profits. It does take about 53% winners just to break even. A solid handicapper can hit between 55%-62%. If you hear a someone on the radio saying the hit in the 75% range, they are either flat out lying or they are telling you that they went 3-1 on there last 4 plays. 75% in a short amount of time is not impossible. I am a firm believer in wageriing a lesser amout on more games. I have written a spreadsheet that uses the same factors on all games and usually comes up with 12-20 NCAA Football games per week. A similar spreadsheet for the NFL comes up with 3-6 plays per week. The spreadsheet has won 60% consistently over the past 5 seasons. I have shown profits in the range of 50-65 units per season. Since I use and recommend a “flat” bet system, I wager 1 unit per game. You will see alot of handicappers that have a star or rating system. Let’s say that they have 3 plays for any given day. For example, lets says that they rate their plays 1,3, and 5 stars. They hit 2 out of 3 games but their Top play loses.

    (ex.(4 x 100) – (5 x (-110)= -150)

    So they managed a winning record and still lost money. I on the same hand going 2-1 generated you +.9 units.

    (ex. (2 x 100)- (1 x -110) = 90)

    Great idea Mark and you are right, an edge can be found.

    If I can be of any help, shoot me an email or check out my website http://www.treywins.com

    Comment by Trey -

  180. Mr. Cuban

    Congratulations on the brilliant idea, which I would like to help you implement. I am a securities lawyer with a prominent New York firm and a CFA canadidate and I am proposing a working relationship that won’t cost you a cent until you see some value added (details upon request, but it sure beats $425/hour). Having bantered with colleagues and investment bankers about similar ideas over the last few years, I maintain that, as good capitalists, we have a RESPONSIBILITY to exploit market inefficiencies through arbitrage, and the sports gambling business is ripe for this evolution.

    I know about market inefficiency: (a) I am up 300% this basketball season, having bet on at least one Atlantic division game almost every day, usually parlaying the over/under with the spread and (b) hours and hours of work on my “legitimate” investments have earned me a paltry 24% combined return over the last three years (admittedly on a less risky portfolio than my gambling interests would indicate).

    I also know about the law: (a) assuming we plan to fit into Regulation D, and assuming the fund won’t be an eligible investment for most institutions, we will need to sell this to private people earning over $200k, notwithstanding that these people will automatically ascribe a high level of risk to the fund based solely on shock value (in reality, there is little more risk than conventional investments, as other posters and you have demonstrated, which is a point we will have to sell) and (b) we may run into a public policy issue regarding the legality and palatability of non-individuals (i.e. trusts or corporations) placing bets – I have an idea to overcome this.

    I believe we can sell this but it will take months of legal and economic planning plus some serious financial modelling before even attempting to actually sell this thing. I have a lot more to say, but I don’t care to post it for the entire world to read. I believe we can reasonably project real economic profits for several years, until regulators catch up with the market (e.g. when this business is so pervasive that regulators realize that sports betting guides ought to be governed by GAAP-type financial principles and SEC-type disclosure principles, only then will our “growth phase” likely have concluded). In fact, I expect that the fund will be so successful as to eventually raise a very significant non-legal issue – who, even in Vegas, has a gambling book large enough to consistently take bets valued in the 9-figure range, particularly when the bettor tends to win a lot more often than it loses. We will cross that bridge when we come to it.

    Bottom line: I will soon be in this business one way or the other but I would rather do it with you rather than go head to head with a proven winner.

    Regards,
    J-Dub
    wisebrody@netscape.net
    (or my work email as indicated in my profile)

    Comment by Jonathan Wisebrod -

  181. The tax ramifications of this are horrible, worse than a “regular” hedge fund. Gambling losses are not deductible in full against gambling income (because of itemized deduction phaseouts), so even if the fund breaks even the investors will owe income tax. If the fund loses money, there is no deduction for the loss. Another problem is that, at least under GA law, it would be a criminal act to even participate in such a fund.

    Comment by kevin mcgrath -

  182. Instead of worrying about hedge funds, maybe you should find yourself a new head coach. Because the sooner you get rid of Nellie and his idiotic coaching decisions, the sooner you’ll get your hands on a Larry O’Brien trophy.

    Comment by Brandon -

  183. What is your minumum for buying into your fund? If you get the right group of people together, you can really make some money in sports wagering. Am curious what sports your fund is going to encompass.

    Comment by Michael Taglienti -

  184. NFI is up $7.50 per share since Cuban dropped its name on November 27th.

    Comment by Kevin -

  185. Mark, I hope you’re writing down all these great ideas. This stuff is gold baby! Gold! For instance, the guy who manufacturers golf balls but will soon be releasing software that makes money on the stock market 100% of the time. Hooray! That’s practically ALL of the time that you would be making money. ALL of the time! You could be lounging by the pool, you’d be making money! My only regret is that you didn’t have access to this software last Summer, you could have used it to create a nest egg with which to re-sign Steve Nash. Oh well. Don’t cry over spilt milk!

    Irregardless, I’m cashing out of the stock market and I’m going to invest all my retirement savings in the Cowboys winning the superbowl this year. It might happen!

    Comment by Tim -

  186. Maybe you should have run a spell checker on your post, Michael. Poor.

    Comment by Henry G. -

  187. cuban, cuban, cuban. i know this isn’t part of the subject you’re talking about up there, but i just can’t stop thinking about it. it’s been over 6 months, and I can’t forget about steve nash. On nov. 16th, I heard that you never said one word to Steve. What, you’re not chicken are you? i never thought so. On Feb. 26th, go up, say hi, how are you, etc. I’m still kinda upset that you didn’t want to resign him. The mavs would’ve been alot better this year if he was still there. Look at him now. He’s led the Phoenix Suns to places I haven’t seen in a while. This season is having a slow start. The only person leading here is Dirk. He can’t be the only one to lead in points. You need someone who’s good! And oh yeah, don’t trade Jerry Stackhouse. I personally met him at the women’s basketball 101. I didn’t really talk to him, but he seemed really friendly. He even called me a shorty!! Which I am…hehe, and when I see him on the court, he plays really well, and I just hope you don’t trade him. He’s awesome. I also prefer you keep Devin Harris. I can see a good future. He might even be as great as Nash someday…ooo you better keep him!!

    mffl even though nash isn’t there beside dirk anymore….

    –courtney

    Comment by Courtney Nguyen -

  188. Dear Mr. Cuban,
    I at one point was considering life as a pro gambler and accutally study for it and still stdy the onsite emtions and descion making needed to be successful and would considered joining you on you quest. I f you want a a man whom is hungary and has what it takes to make you and everbody arounf you successful then I am you man. Don’t wonder if you should contact me the only way you’ll know is by giving me a shot right? I mean how would it make you feel if in just a year you flick on the T.V. and you see this young man sitting next to D.T. and he’s being interviewed and nbc ask him about his past plights and he says “Well I tryed to contact Mark Cuban and accutally No offense Mr. Trump he was one of the people I wanted to work for but I gave him the chance and now we all know how that turn out!” Don’t make that mistake I am sure your not a man whom wants to have regets right? I believe you’ll make the right descion the only way your going to know is buy giving me a shot right? Just a minute of your time and you will believe.

    Thank you,
    Michael R. Smith

    Comment by Michael R Smith -

  189. MARK,
    Jay here again…..and I’d like to address this response to the readers of this post.
    I personally have lost thousands of dollars in the Stock Market, but have since turned it around in the sports investment industry.
    Our site, wicked-picks.com, has consistently rewarded our members with winning picks as we have an almost non-existent turnover of memberships.
    See our most recent results for proof: http://www.wicked-picks.com/content/performance
    There are so-called “experts” out there that are legit and make tons of money with their picks…we know…we use them ourselves.
    I just have to agree with Mark on the concept that, if done properly, a sports betting hedge fund can(should) be more profitable and contain less risk than playing against Wall Street.
    I hope you can do this Mark and wish you and everyone else the very best of luck.

    Comment by Jay Rabalais -

  190. Hello Mark, if you’re truly serious about the fund, please count me in. I’ve developed a very simple system on certain games to beat the Casino on a regular basis and enjoyed the supplemental income for years, and I’ll be glad to share the system with those with discipline.

    Also, thanks for the complimentary ticket to the Mavericks game last week as we had a great time.

    Regards,
    Paul

    Comment by Paul -

  191. Mark,
    This is a very interesting idea.
    I currently work in financial industry on the quantitative side of the business and ideas similar to this have crossed my mind. With the development of such market makers as Tradesports.com this seems like a natural evolution.
    As mentioned in #31 and #79, Justin Wolfers at Wharton may be someone worth speaking with. I recently saw his presentation on “Prediction Markets” and found it very informative.
    Here is the link to his whitepaper.
    http://bpp.wharton.upenn.edu/jwolfers/Papers/Predictionmarkets.pdf

    Good Luck,
    Alex

    Comment by Alex -

  192. Hi Mark!

    Congratulations on a terrific idea (however I did think of this years ago owning a Hedge Fund company myself). There are various problems and legal issues you will have to wrangle with, and I’m not sure you will pursue this dream after you see all the roadblocks in the way.

    Regarding people telling you their betting theories, I just have to laugh. I’ve been betting for 10 years, and make a living at it. For the people that come up with the “doubling” theory (like poster above here), I can only think one thing…”amateur”. Any professional gambler knows that statistical anomolies will occur (where you will win 15 in a row, but might lose 10 in a row). It’s not very pragmatic to bet $32000 just to win $100. A real professional gambler bets instinctively and changes his bets according to how confident he is with a likely outcome, not on emotion or desperation of trying to win money back.

    P.S. Take the Lakers (+5) at home tonight vs. Phoenix….Lakers should win outright.

    Comment by Dallas Campbell -

  193. As some people know, roulette is a beatable game. Just look at the 1.3 million Pounds legally taken out of a London Casino:

    http://news.bbc.co.uk/1/hi/uk/4069629.stm

    My Partner, Laurance Scott, is the authority on Roulette Visual Prediction and can help you design the next generation of roulette computers to take the casinos out to lunch. His experience in designing, creating, and working roulette computers is extensive to say the least. Contact me if you’re interested.

    Comment by Eric Laing -

  194. Your assumptions of the similarities and differences between the stock market and gambling arenas are extremely interesting, but I believe you eluded to the fact that unlike sports, some business have a business model relatively more solid than any sporting franchise or card game (with the possible exception of maybe the hated Yankees), that will constantly prove a stream of cash flow that is unlikely to dry up.

    There are possibly a handful of companies that have and will maintain their performance and are far more capable and stable the a government is in terms of payment and have the ability to react to monetarily to any political situation (again unlike any government).

    It is agreed that accounting magic can create a penny here and there, but as we should know, like most sports teams, a good track record should be shown before even bothering to be enticed into believing certain managements. Would a free agent join the mavericks before you came along?

    Hence to sum it up, betting on managements of good companies with strong cash flows is still better than odds at any casino, (and they do kick card counters out, so there goes your blackjack run) will offer.

    (Q.E.D)

    Comment by Daniel Lim -

  195. BECAUSE, ONLY YOU, OF ALL PEOPLE MAY READ THIS AND HELP….

    Open Letter
    Concord (Online) School of Law Experiment

    American Bar Association
    Section of Legal Education Admissions
    321 N. Clark Street 21st Floor
    Chicago, IL. 60610

    United States Department of Justice
    Civil Rights Division
    10th Street and Constitution Avenue, N.W., Room 5643
    Washington, DC 20530

    Toby D. Slawsky, Esq.
    Circuit Executive
    United States Court of Appeals
    For The Third Circuit
    22409 U.S. Courthouse
    601 Market Street
    Philadelphia, Pa 19106-1790

    Gayle Murphy
    Director for Administration
    The State Bar of California
    180 Howard Street
    San Francisco, CA 94105-1639

    Michael P. Lambert
    Executive Secretary
    Distance Education and Training Council
    1601 18th Street, NW
    Washington, DC 20009

    RE: REQUEST FOR ASSISTANCE

    Dear All:

    I. BACKGROUND

    In 1977, Kaplan Education LTD was sued by the Federal Trade Commission at Federal Trade Commission v. Kaplan Education, LTD, et al, 433 F. Supp. 989, *; 1977 U.S. Dist. LEXIS 15398, **; 1977-2 Trade Cas (CCH) P61, 541, for false, misleading, and deceptive representations. Thereafter, the company was sold to the Washington Post Company (NYSE: WPO) and now operates as Kaplan, Inc., Kaplan Higher Education Corporation, Kaplan University, Kaplan College, Concord University School of Law, Kaplan Educational Center, Inc., and other.

    Of particular interest to my issue is Concord University School of Law, the first online law school approved as a degree-granting institution by the State of California, Bureau of Private Postsecondary and Vocation Education. It is registered as a correspondence school with the State Bar of California. Interesting however, according to correspondence I received in 2003 from John W. Barth, Director, United States Department of Education, Office of Post Secondary Education, in 2000/2001 when I enrolled, the law school didn’t have authority to grant a Juris Doctorate degree. In short, Kaplan, Inc.’s ownership of a tiny 500 student school/campus (Kaplan College, Davenport, Iowa) in 2000/2001 was Concord’s only means and legal authority to grant postsecondary degrees.

    Students who earned a Juris Doctorate degree from a correspondence law school registered with the State Bar of California are eligible to sit for the California General Bar Exam. And, once a graduate receives a California license he becomes subject to the reciprocity rules for state license in the other jurisdictions. The online law school is required by its regulators to keep copies of all academic files in its administrative offices.

    II. MY PERSONAL ACCOUNT OF THE FIRST ONLINE LAW SCHOOL

    I am an African American living in Pennsylvania. In 2000, I made application to Kaplan College (Concord School of Law), scored 14 of 15 correct on the entrance examination, passed the “psychological testing,” and was advised by Mathew McClenahan, Director of Enrollment, that I was accepted as a 2000 “third-year” transfer.

    However, a week or two later, representatives from the law school started expressing an unusual concern about my race and ethnicity. Although I had refused to provide the information on my application, school representatives now were asking bizarre questions: “Your surname is German, but your wife sounds black?” “What race are your kids?” So we told them we’re black. And, almost immediately, Mr. McClenahan would announce, “The administration changed its mind about your enrollment, your race (African American) doesn’t fit the planned demographic for the inaugural group of students.”

    We complained and hired a Pittsburgh attorney. The attorney’s evaluation of the situation is well documented. But, nonetheless, the issue appeared to quickly resolve itself. Mr. McClenahan would later call, apologize, and although it was too late for a 2000 enrollment offer a January 2001 start.

    January 2001 arrived, but Concord didn’t communicate any additional information, and/or grant me access to their online campus. I guess they were hoping I would somehow go away. So I complained again in writing. This time, Mr. McClenahan resolved things by explaining “things were delayed” because he had to rush together a “third-year” program for my enrollment. He added: “We didn’t have any ‘third-year’ courses.” In short, Mr. McClenahan said he “combined ‘second-year’ electives with a new ‘third-year’ evidence course” he rushed together (created just for my enrollment).

    I did start in the second or third week of January 2001. A few weeks behind, I was excited and wanted to immediately get involved with my new law school and course work. Unfortunately, I would soon discovered that the online law school didn’t have a “highly interactive” campus, with the 600 to 1000 students, as advertised. In fact, I could find no more than 25 to 30 “first” and “second” year students. In addition, there were no “professor-led group chats” and no “chat archives” to memorialize actual participation. I was only online with nothing to do. I immediately wrote the administration. Mr. McClenahan, in response on January 18, 2001, wrote: “I have the answer to the situation, however, I will need another day or two to implement.”

    However, the problems didn’t get corrected. Mr. McClenahan did eventually facilitated access to “second-year” chats, but explained that there wasn’t any “third-year” evidence chats and no “chat archives.” He reminded me that there wasn’t a “third-year” program. To curb my enthusiasm, almost immediately thereafter, I received an unannounced “pop” quiz in the “third-year” evidence course. Such appeared strange because there really wasn’t any assignments to be tested on. Nonetheless, I scored 8 out of 10 correct.

    A couple more weeks, maybe a month, had passed before the first actual group classroom activity. Because there wasn’t a “third-year” program, “professor-led” group chats were limited to constitutional law, civil procedure, and criminal procedure. What Mr. McClenahan said were “second year electives.” During the group chats we covered material in a hasty superficial manner. Students were permitted to submitted comments to online professors who screened any and all student information before it was posted for others to view. But in all the activity served more as only an introduction to one or two cases, and maybe a quick 20 minute “rush through” of the remaining material. Other than that there was nothing more to the first online law school.

    Yes we were required to read the material on our own, take a quiz or do a writing assignment every other month, and submit the materials to the administration for grading. But quickly I noticed that anything I submitted, course questions and the like (to the alleged assigned professors), were in fact always answered by the administrative office. It appeared there was one person at the California administrative office who did everything (grade assignments, correspond with students, and the like).

    Needing more, I began researching the assigned material and cases on my own. That is, I looked beyond the text books, beyond the uninhibited online campus, to the actual cases (and treatment given by the appellate courts). I began approaching the material in a manner similar to how students at the “bricks and mortar” law schools research the law. Such did helped me acquire a better understanding of things. But, the school administration didn’t appear receptive. That is, I received very bizarre comments from the administration, “It’s

    Comment by Kstreetfriend -

  196. I think it’s a great Idea.

    Comment by Blog -

  197. I suggested that he should start a private equity firm focusing on early stage tech companies in response to an earlier post. “Smart money” employs an information and analytical advantage to beat the market; the only relevant industry knowledge that Mark brings to the table is in technology. Successful investment funds generally have a focus in an area where they have expertise and an analytical advantage: Soros->currency markets, Griffen->risk arbitrage and event driven strategies, etc.

    Mark Cuban has bootstrapped several start-ups and would be a tremendous value add to early stage tech companies that he invests in.

    Comment by Anonymous Coward -

  198. Mark,

    This sounds like a good deal. Let the fans know when you can start this and what the minimum is. I’m ready!

    Jim

    Comment by Jim -

  199. You have some tax issues of course unless you can package this into something. This wouldnt be tax friendly at all.

    If you are looking for a CFO, I’m available! Check out my web site, all about hedge funds.

    Comment by B Bulsara -

  200. Mr

    This sounsd very similar to the SAC Capital model

    Comment by hunhun8 -

  201. Sign me up Mr Cuban!

    On another note. Itra-game trading for sportsbooks is a BILLION Dollar idea.

    Comment by KC -

  202. Great points Mark, but just to clarify a bit on the Blackjack bet not having value. A players advantage changes as the cards are dealt out(ratio of low cards to high cards. It’s not like slots where there is a constant house edge. That’s how card counters get their edge–bet big when you have the advantage and bet little or nothing at all when the house has the edge. That’s also how I pay my college tuition. Oh well, just my 2 cents.

    Comment by Anthony -

  203. Just to be a wet blanket here —

    The “big” money is not in the bets, unless you’re the house (or Lyle Berman). It’s in the marketing. A Cuban Crew at the WSOP, WPT, etc. would just slay the poker world. Think of all the 20-somethings that would be all over you, Mr. Holdem Hoops! I still don’t think Stern would ever in a million years let something like this slide for an NBA owner, and who would ever give up *that* gig?

    Ride the wave, baby…fund a crew.

    Comment by Scott Chaffin -

  204. darvas? what does a dancer who used channel breakouts have to do with sports betting? you would be better served reading about bill walters and the computer group…

    to make this venture worthwhile, you have to have the same characteristics of a sucessfull hedge fund – namely, have an “edge”, or be able to absorb risk premiums from various markets. i believe as certain hf strategies lose their returns due to capital constraints/competition (think declining returns for merger arb), you will find a number of new alternative strategies to diversify for the endless appetites of fofunds.

    i work as a quant, and there are a number of parallels with investing/trading where you can find this edge in sports betting.

    fundamental – ie you know more than anyone about biotech stocks or UNC-Charlotte basketball, etc. you know that the star point guard has the flu, went out drinking last night, etc. this is simply being more informed (almost like information arb) than anyone else.

    quantitative – build perdictive models and/or arb. ie what statistics are important to the line? an associate and i use an arb model sucessfully, but not in the traditional arb where you arb the lines between differrent sportsbooks…

    behavioral – realize there are psychological tendancies of the human brain – ie failure to emphasize one event and over-extrapolating a series of events…

    Comment by bubbrubb -

  205. Funny most serious hedge fund managers apply gaming theory to the money management and position sizing of their fund management.

    Comment by Ken -

  206. Mr. Cuban – this is going to draw a fine from the NBA.

    They are so sensitive to this stuff (as they should be) that even the slightest infringement into this area is going to send alarms ringing throughout the Sterm Compound in NY.

    I can see it now, Mr. Stern (let’s give the man his respect here – he isn’t David b/c I don’t know him the same way you are Mr. Cuban and you are both very good at what you do and deserve that measure of respect) being awoken by the Cuban hotline – a little blue number on the bedside table and matching one on the office desk ringing with a flashing Mavericks logo – “alert alert alert”…

    Within minutes your mobile phone is ringing and your e-mail is screaming, “You’ve Got Mail!” with Mr. Stern on the line.

    In his most impressive and professional voice he speaks slowly into the phone, “Now Mark. You know you shouldn’t be saying this stuff. Any impropriety will reflect poorly on the league and put into question the integrity of our great sport.”

    Sighing you reply, “David, my man. Who do you want me to make THIS check out to….”

    Rack me!

    Chris

    Comment by Chris -

  207. Mark – Every action in life is a gamble (not just investing), but most of our actions are gambling choices we make subconsciously everyday.

    I always get a kick out of folks who say that they are not risk takers, yet as an example many are too lazy to check their car’s tire pressure at regular intervals for instance (if ever at all). Heck just getting in your car and driving is a quantitative and qualitative risk – most just don’t realize that they’re betting something really valuable right then and there. They don’t even think about the risk of car trouble, or wrecks or god forbid injury or whatever because “the odds are it will not happen to me”.

    Life is full of hedges, but living it makes it work the risks we rarely realize we’re taking. When people open their eyes and see just how often they gamble what they take for granted each and every day, they’d look at your little crafty hedge idea and say .. hmm that’s not such a big risk afterall.

    Comment by Jason in Tampa -

  208. Don’t do it! You’ll be sorry!

    …on second thought, where do I sign up?

    Comment by Pete Rose -

  209. Is it April 1st? Good timing! I subscribe to the email called “Napoleon Hill – Thought of the Day” and on Friday I got this: (fyi, N. Hill’s ‘Think and Grow Rich’ is probably the best book out there on success)

    ******************

    November 26, 2004

    PEOPLE WHO GAMBLE FOR MONEY ARE POTENTIAL CHEATERS BECAUSE THEY ARE TRYING TO GET SOMETHING FOR NOTHING.

    Anyone who risks his or her wealth upon the fickle whims of chance is usually not the type of person you would like to have for a business partner. They are individuals who are most likely to yield to the temptation to cut corners on product quality, overlook unsafe working conditions, and generally fail to deliver on their promises. It is impossible to get something for nothing for a sustained period of time. The law of compensation is unforgiving in its demands that you get what you deserve. You may feel at times that you deserve better-and you may-but eventually your payback will be commensurate with your efforts.

    This positive message is brought to you by the Napoleon Hill Foundation. Visit us at http://www.naphill.org. We encourage you to forward this to friends and family. They can sign up for this free service at our web site.

    ***********

    Comment by greg -

  210. I knew it was only a matter of time before the touts and get rich quick schemers would show up with their pie in the sky.

    Comment by Scott V. -

  211. Response to Greg Martin’s post,

    To my knowledge, there is no system in existence that achieves 100% profitability (after inflation and taxes, that is) over any given time period. I find it difficult to believe that your quantitative trading system can deliver as promised when implemented in a real-time trading environment (i.e, not back-tested). However, there are a number of quantitatively-oriented hedge funds that have performed spectacularly well over multiyear periods: Renaissance Technologies, SAC Capital, Paloma Partners, DE Shaw and Atlas Fund all come to mind (along with the proprietary trading desks at Goldman & Lehman). AlphaSimplex Group, run by MIT professor Andrew Lo, is another interesting shop. In any case, I would subject the model to rigorous stress testing, etc. If you can truly prove the model’s utility through an actual performance record, then I would approach a number of these and other money managers. If you plan to distribute the system on a mass retail scale and are successful, then the model has to be dynamic and “intelligent” enough to overcome the inevitable performance degradation that accompanies widespread use (in other words, the trades recommended by the model may become too crowded if a lot of people utilize it). The same outcome applies to hedge funds and institutional money as well: many hedge funds are short the dollar, short tech, and are mostly crowded into the exact same trades, names, etc. This groupthink has resulted in most funds posting YTD performance numbers that are downright embarrassing. Just because common sense, academic theory and/or market precedent dictate that a security should be priced at $X doesn’t mean that it will trade for $X. Good luck.

    Comment by Steve -

  212. Mark,

    It seems like this would be similiar to other hedge funds but a slightly different focus. It would be highly profitable if the team worked very hard, did lots of research and occassionally got lucky. I think you should go for it. I also think that the NFL is the easiest target. I have picked over 60% verse the spreadthe last 6 years and I don’t think I have any extra special system.

    Comment by Joe B -

  213. While it is an “idea whose time has come”, I suspect the DOJ will think otherwise, as I’m sure you know.

    As a co-founder of a company that pioneered exchange betting around the world and has just launched the world’s first true peer-to-peer betting network, (www.betbug.com) I’ve spent many hours discussing the similarties between acquiring risk on sports, stocks, commodities, etc. If you are interested in this sort of thing, you may wish to speak with Justin Wolfers, formerly of Stanford and now I believe at Wharton. A professor at the MBA school, he’s the only guy I know who has officially recognized the similarties at such a high academic level. I’ve corresponded with him a number of times and he’s very approachable.

    You might also be interested to know that our company was the first to do Monte Carlo modeling and build sophisticated market making tools for sports betting exchanges.

    If you remain interested, feel free to drop me an email.

    Great site by the way. I read it every week.

    Comment by Anthony Novac -

  214. Cuban, you suck and so do the Mavericks. The Celtics will win the championship, mark my words.

    Comment by Dennis -

  215. Mark, where do I send my resume?

    I trade based on psychology. It is IMPOSSIBLE for the market to trade efficiently. People do not make decisions based on logic.

    I’m 25. I was going to start up my own fund after getting a few more years of a track record beating the S&P (I currently am at 5+ years). But you present a better opportunity.

    Interview me. I’ll wash the analysts dishes if it gets my foot in the door.

    In a past email you said that if I apply myself I can learn more on my own, then I can in grad school. Let’s prove you right!

    email me and let me know where to send my resume.

    Comment by Greg Wilson -

  216. i was lost mid way thru…but read on anyways. i got 20 bucks mavs make the lil general their next coach…
    https://dallaspartyrental.com

    Comment by Luis -

  217. A couple of things:

    Sports bettors regularly make money. All you have to do is be able to beat the conventional wisdom, which is often wrong. There was an article in my alumni magazine about an alumnus who was a professional gambler, and that’s what he did. He’s compute his own odds on sports games, and if his odds were better, he’d bet.

    There are some syndicates that do this in Asian horse racing as well.

    Second, check out http://www.marketocracy.com (disclaimer, I work for them) you can start a virtual fund there with $1,000,000 of pretend money and see how you do. If you do well, you can automatically get selected for running the main fund that uses real money.

    Comment by Pierce Wetter -

  218. I have been gambling on sports since 1995. Each and every year I usually profit. My low was a profit of $16,000 and my high was a profit of $33,000. I am very consistent in my money management which is just as important as picking the games.

    I only rely on my own picks and feeling. Any gambler knows that to rely on someone elses picks is risky. However, there are some outstanding cappers with excellent track records.

    Sometimes I call or watch the tv for a man named Michael Cash Pomer located in the Toronto area. This man is the most personable entertaining man ever. He does charity work, and always promotes businesses in the area. He is logical, realistic and fun.

    Mark, I would love to be paid to make picks for you as well as recommend Mr. Palmer.

    I will not make you a million bucks if my starting seed money is a thousand. But I can with reasonable certainty give you a good % profit.

    Let me know

    Patrick Muldoon – Mark Cuban Fan For Life

    Comment by Patrick Muldoon -

  219. The Maloof’s don’t take NBA bets in their sportsbook @ the Palms – obviously, Mark would operate the same way.

    Comment by Joe S. -

  220. Our company is in the process of finalizing software that allows investors to buy and sell stocks in an automated fashion via their computer. It never makes a mistake and never loses money. Just like the computers the big guys use in NY on Wall Street. We will make this software available for sale in 2005 and Mark, if you want to reach that 100% level of stock winners,we’ve got your ticket to our game and we can help you do that. This formula could also be applied to making bets on sporting events etc..I guess my tech guys just got a new reason to put in more O.T. Our main business is golf ball manufacturing but the pathetic stock trading software on the market forced me into developing another arm of the company. Hey Mark..want to discuss an opportunity?

    Comment by Greg Martin -

  221. Mark, if you need anyone to help ya out who knows jack squat about what you just described, then i am your man.

    Comment by John -

  222. I like it. This idea kicks ass. I want in.

    Comment by James King -

  223. My first impulse when reading this was that the NBA would have to look poorly (to put it mildly) upon such an operation. Maybe if there were no sports bets being made by the fund, and certainly not any NBA bets it would be allowed by Stern et al. But then I remembered the Maloofs. Does the Palms have a sports book? And if so do they take bets on the kings games? I would imagine the answer to both of these questions are yes which brings up some interesting conflict of interest issues.

    Mr. Cuban I’m curious how far you’re willing to go with this idea. Would there be restrictions on the type of gambling or would anything suffice?

    here’s a few ideas.

    Forming a team of poker players and paying their expenses, entry fees, etc… similar to what you already do with the Mavericks. Essentially you would be running another team and then pooling and distributing winnings, while keeping a share for the owners. this would almost be like a NASCAR team.

    I don’t think this would work well for a casino, the table games have too big of a house edge, and the only way to consistently beat them is to cheat. And cheating gets you kicked out of casinos. Hell just winning consistently would get you kicked out of a casino, so running some kind of scam similar to those MIT kids would probably not work.

    Parimutual betting would present an intriguing possibility. Bringing resources to bare on racing may make it possible to beat the system, i just don’t know enough about it. The few people i know who were heavily into racing lost money, but as time went on they did seem to lose less of it, implying that they were at least learning something from the system.

    Another interesting possibility would be betting on unusual things that you would have the power to influence. e.g. betting on the presidential election and then working towards getting a particular candidate elected to collect the payoff. With the resources at your command this would probably be feasible.

    State lotteries and contest give aways might also be an opportunity. I’m thinking specifically of Lazlo from Real Genius and the contests that he won, although that might be too small of a scale for an investor like you.

    Anyways it’s an intriguing idea, thanks for giving me something to think about for 15 minutes. Oh and thank you for the last several years of the mavericks, for this depressed bulls fan, they’ve certainly been a bright spot in the NBA.

    Comment by alex -

  224. Mr Cuban is joking, right?

    Comment by Molly -

  225. I highly reccomend you investigate the business operations of casino companys such as Bodog, Party Poker, and Paridise. Paridise is a prime example, it was just bought out and could have been primed for the picking. These offshore ventures are far more profitable and easier to operate than traditional casinos, and with Mr. Cuban’s name and relationships this could possibly be his largest venture to date. Low overhead, 80% of the expense is marketing & customer service… you have just got to love this formula!

    Lets just consider low limit poker. According to the industry source – http://www.pokerpulse.com, there has been $153,422,016 wagered online playing poker in the past 24 hours, with an estimated 1.3 million customers during the month of October. The house makes it’s money off the rake, at an average of $1.75 per hand played at each table, this equates to $2,530.00 per table per day. Lets now assume that Party Poker has on average 600 tables that collect rake. This is a gross revenue of 1.5 million per day, or 1/2 billion per year. Of course this does not include soponsorship fees or mercendising rights… but you can see this becomes a very profitable business whose overhead is probably less than 15% of Gross revenues.

    Mr. Cuban… I think THIS is your future. Now that the WTOP has rules the US cannot prohibit it’s citizens from offshore gambling, perhaps its time to relocate to Antigua?

    Comment by Drive TT -

  226. Mark Cuban has enough money to own a sports book. This would give him the opportunity to bet on a particular game (by shading the line slightly to attract money on the side he wants to bet against) and in effect get +110 on his wager rather than -110 if he was a bettor.

    Comment by Scott V. -

  227. Big, old-school, bookie-style sports books are dead. Taking a 50-50 bet at -110 is the same as equity commissions were pre-Fidelity, pre-Etrade, pre-Schwab. The strongest point that Mark makes is that sports betting really isn’t that different than equity betting (aka “investing”).

    Also, there is no reason sports betting markets should be seen as static investments. That’s like only being able to trade YHOO at open and at close.

    Sports markets will evolve the same way that personal investor equity betting has evolved. There is absolutely no reason that a sports wager can not be traded dynamically, during the running of a game. Some people may want to bail on a wager to recoup 10 cents on the dollar and some way to throw the dice on the longshot and buy a wager for 10 cents on the dollar. Let the market work.

    Tradesports and others are doing some of this with intra-game trading, but this is a whole new world. When you see sports wagering as a market and not just as a 50-50 proposition bet, then I can imagine whole companies dedicated to it. And the scary thing is, that company looks a lot like a hedge fund: portfolio manager, cfo, game analysts, traders, and a whole boatload of quants.

    Comment by Sam O -

  228. Here are the main pros and cons of your idea.

    The pros are that you are correct in assuming that the sports betting market is very inefficient in a number of ways.
    There are those that make better numbers than the bookmakers by using computer based stats mixed with injury reports and road trip reports.
    As an example the line may be Mavericks –4 and they predict that if the game were played a 1000 times the true line should be Mavericks –6 so they have an edge by betting on –4.
    They look at all results as a gaussian distribution with more positives than negatives.
    A good winning sports bettor (investor) will have a long term record of 55% winners Vs the spread.
    You need 52.38% winners Vs the –110 juice to breakeven.
    The beauty of the sports betting market is the ability to shop at different sportsbooks.
    In the above example most sportsbooks may offer Mavericks –4 but you may find a sportsbook that offers
    you –3.5. This means in the gaussian distribution of results, every time Mavericks win by 4, you win the game instead of push (tie) .
    Can you imagine a stock market that offers you prices on the same stock up to 5% cheaper!
    There is another area which is exploitable just as the stock market is.
    Arbitrage. You can arbitrage (scalp) lines across different sportsbooks.
    As an example in baseball you can often get +130 on one team and –125 on the other.
    This would give you a 0.98% ROI.
    Another form of arbitrage is the middle.
    Where one book offers you –6 on one NBA team and another book offers you +8 on the other.
    The favorite will win by 6, 7 or 8 enough to overcome the juice (commission).
    How do we know this is true? Quite a few other people and myself have vast databases of results and stat breakdowns, which tells us the estimate of the probability of a result happening.
    The above is very simplistic and only scratches at the surface of sportsbetting. There are a lot of methods and techniques that are not public knowledge for obvious reasons.
    The sharp bettors like to stay one step ahead of the bookmakers. They do not want them to plug up the inefficiencies.

    The cons.

    As a winning player you run into the problem of getting “backed off” from sportsbooks.
    Meaning if you win too much or they believe your action to be sharp they will close your account and ask you to leave. Just as a card counter in Vegas is asked not to play.
    The bigger the amount, the more trouble you will have getting down at the best prices.
    The stock market is a huge market compared to the sports betting market and can stand a lot more action.

    Saying all that there are large syndicates out there who are already doing what you are proposing.

    If you have any specific questions about the sportsbetting market feel free to email me at
    dreamer_bj21@yahoo.com

    Comment by Dreamer -

  229. Mark,
    Your assumptions and observations are even more acurate then you expressed,how & why you ask. DERIVATIVES MARKETS, Let’s not forget that boondogle.

    Happy Trials, Whats your minimum?
    LeeF

    Comment by Lee F -

  230. Mark,
    Your assumptions and observations are even more acurate then you expressed,how & why you ask. DERIVATIVES MARKETS, Let’s not forget that boondogle.

    Happy Trials, Whats your minimum?
    LeeF

    Comment by Lee F -

  231. Good luck Mark

    Christopher

    Comment by LostInAmerica -

  232. If you have the kind of money that you have, the previous poster is right. There is no reason to place bets when you can be the house. The reason for this is that you can gamble as the house by not trying to balance your books: You bias the line you offer the public in the direction that will get you money on the side you want to bet against and less money on the side you want to bet. Normally all you need to do is charge a fee to bet the side you don’t want them to, and give the public true odds on the other. In the meantime, you get everyone’s vig and most of the time you can get your real bets in without paying for them. There is at least one place I’m almost certain does this and does it well.

    Comment by Zvi Mowshowitz -

  233. An observation – it seems to me the most consistent way to “win” at gambling is to be the house.

    Interestingly, I recently had the opportunity to meet the founder and current vice-chairman of a very large, major gaming company. Great business for him as an owner – but he, personally, doesn’t gamble at all.

    Comment by Shannon Clark -

  234. Financial goals. Investment plan. Retirement planning. Are you still with me Mr. Cuban? Most people think the stock market is an easy method to make money. Experience investors know that it takes a lot of hard work to find a company that is a great investment.

    D&B reports, debt structuring, corporation legal entity studies, understanding of suppliers, customers—All this information is needed to find a solid investment.

    A lot of people have taken a chance on the market and lost. They followed a hot tip they picked up at last weekend’s cocktail party or tennis game, they invested in their brother-in-law’s company, or they bought into a company they believed in with all their heart. Then they saw it fold, and now they figure once is enough. That fear can be even harder to overcome than the fear that results from inexperience.

    First, its important to note that each particular investment is subject to all the general risks that come with that type of investment. For example, stock prices rise and fall with the stock market cycle, making stocks as an investment subject to market psychology risk. If you buy stock, you inherit that cyclical economic risk. Every bond or certificate of deposit presents some inflation risk, because a rising price level reduces the purchasing power of a fixed income. If you buy any single bond you inherit the inflation risk that comes with all bonds.

    Remember the goal in investing is not to make millions or get rich over night; the goal is to get as far away from zero as you can over a given period of time. You want to do it one penny at a time. That mean’s staying away from hot new companies like Sears Holding (unless you are shorting it), and opting for companies with a proven track record like Heartland Express (HTLD).

    Are gambling and stocks the same, yes! If you gamble without understanding, then you are the same as an irresponsible investor. If you learn how to card count then you are the same as a wise investor. Stock is about the numbers at the end of the day.

    At the end of the day there are a lot of ways the quality of a stock can be measure. Don’t bother with looking at earnings. Under the products and services that the business offers, its debt structure, and its competitors. If you find yourself not understanding the company’s given industry, the product, or structure of debt, then buyer b-e-w-a-r-e.

    Below are companies in which I have bought stock. And, I plan to keep it that way for the next year.

    Zimmer Holdings (ZMH)
    Marten Transport (MRTN)
    Heartland Express (HTLD)
    Kroger (KR)
    EADS NV (Paris: EAD)
    Metro AG (Frankfort: MEO)

    Comment by Sterling Wright -

  235. Hey, Mark,
    A friend directed me to this particular post (though I had read other dispatches from you in the past), and I have to say that your idea is one I’ve tried to draw my friends in on for quite sometime. See, I deal in pari-mutuel wagering (Thoroughbred racing mostly, but I’ve dabbled in harness and greyhound racing), and I think that with the right capital, the game is beatable–even with the 20% takeout rate. Horse racing offers Pick 4 and Pick 6 wagers whereby you pick the winners of X amount of race (four or six, respectively, in this case), and the payouts can be quite handsome… easily six figures in the pick six case. The risk is large, but the reward is ALWAYS worth it because if you pick your spots well, then I could easily see a $25,000 investment returning six figures. Even after taxes you’re still talking a 200% ROI. Anyway, I’d like to join your team as the pari-mutuel analyst.

    Comment by Eddie D. -

  236. How do I get into this fund? Are you being serious or sarcastic. I’ll take the odds on Mark Cuban!

    Comment by Frank Z -

  237. This sounsd very similar to the SAC Capital model

    Comment by Dave -

  238. read Wall Street:the other vegas

    Comment by tk -

  239. I’m sure your friends at NBA headquarters will be thrilled with this idea.

    Comment by Stewart Ugelow -

  240. Undoubtedly you have the PERSONAL skills to make it happen. You truly are a jack of all trades, master of many. You know .com, you know business start-ups, you know derivatives well enough to structure your own hedge and school every engineer in GS Equity Derivatives, but hiring your talent for your gambling hedge fund is based on circular logic and unless the outcome is based on your personal skills, your returns will not be maximized and your venture won’t meet your expectations.

    Just like you don’t need money to start a company (even when you were worth $500), relying solely on sweat equity, the very best don’t need your capital to make their own calculated bets. So you are left with the supposed “smart money” that brags abouts their results and provides sub-par returns.

    *P.S. – Pushing bonds appears phony especially from a man that “touched all 4-bags” via equity euphoria.

    Good Luck,

    KJF

    Comment by Kevin Flick -

  241. interesting idea but i would rather play a thousand at roullette than buy stock in a company that files ch11 cleans you out and then one year later buys another company for billions ie:kmart at least in vegas you can watch naked people

    Comment by rodney frame -

  242. Two books for you written in the 60’s:
    How I Made 2,000,000 in the Stock Market by Nicolas Darvas
    &
    Wall Street: The Other Las Vegas by Nicolas Darvas

    You would enjoy based on this post!
    Piranha

    Comment by Christopher Perruna -

  243. Definitely sounds interesting. I’m definitely watching to see what happens with this.

    Comment by Jeramey Jannene -

  244. Wow, the amount of posts on here is incredible.
    While I am not sure whether you are serious or just going for dry wit regarding the state iof the stock market, but here’s what I had to say on http://thenats.blogspot.com/2004/12/fool-proof.html when someone mentioned it to me (some of it was said tongue-in-cheek but I believe the theory is sound):

    ——
    So, when Don Money asked me if Mark Cuban’s hedge fund for sports gambling would be something I would invest in, I needed to post my “if I only lived in Vegas” musings to answer fully.

    Yes, DM, I would, but only if Mr. Cuban met with me for a few minutes first to discuss what I believe is a foolproof plan for sports gambling if you had the time and money.

    Now, perhaps you may have heard of the doubling system in Blackjack. Essentially, that is a betting system that is “in theory” foolproof. What it requires is that you start off with a bet, let’s say $1. If you win, you put that $1 profit away, and you bet $1 again. Every time you lose, however, you double the bet–i.e., if you lose, you bet $2 next, then $4, then $8, etc. When you finally win a hand, you will have recouped your losses and actually won $1. You put that $1 profit away and start over.

    The casinos know this, which is the reason that blackjack tables have maximum bets (you thought it was because they didn’t want you to lose more than $5000 at a time?). The maximum bet rule stops the doubling system because while you will definitely win a hand eventually, you may actually lose the 11 or so hands in a row it will take you to be more than $5000 down at a $5-$10 minimum table. If there was no such maximum, and you had a serious bankroll, you could make blackjack a career and never lose. With the maximum limit, you can lose and lose a lot.

    Sports betting in Vegas is subject to no such maximums of which I know. Therefore, the doubling system should in theory be foolproof. The beauty of it is also that it doesn’t matter who you bet on, what sport, or what knowledge you have as long as you follow two important rules: 1) only bet on the 50-50 spread and over/under lines (as opposed to odds, parlays, money lines, etc.) and 2) do not bet on multiple things at once.

    This works especially well during baseball season (for over/under run totals) [note: thenats.blogspot.com is obviously a DC baseball site] when there are multiple game starts throughout the day. Assuming you start on the first day of the season, figure about 190 days of baseball and about two-three segments of games (2pm eastern, 8pm eastern, 11pm eastern) each day, so you’d be making about 500 bets a season. Let’s assume $100 per bet, each win gets you a profit of $100 (I’m ignoring the percentages that the casino takes–you can adjust the bets accordingly to take this into account ($110 to win $100 the first time, $231 to win $210 the second time, etc.)). With 50-50 odds, you should win approximately 250 of the bets leading to a profit of $25,000.

    Anyway, I don’t live in Vegas and I don’t have Mark Cuban’s bankroll. But, Mr. Cuban, if you use this strategy and add to your billions, I expect a small cut 🙂

    Comment by dexys -

  245. Dear Mark,

    I have been a professional in the commodity industry for over 36 years. I have done many studies why people can not make money trading. I have always heard that 85% of the people the invest loose money. The reason is the same reason why Las Vegas does so well. Taking a lost is against human nature. It’s admitting failure. So we don’t take that lost until it’s to big.

    I now let the computer do the trading. It’s programed to buy and sell according to a set of trading rules. It only day trades. It’s less stressful and more successful.

    Now I enjoy the profits I always knew I deserved.

    I enjoy your site and I enjoy your basketball more.

    Good Luck Trading. People usually need it.

    Comment by John Indelicato -

  246. Mark –
    Just came accross your blog about the hedge fund and am very interested in your fund idea, as I am building up some momentum myself to do the same thing (I am a successful 55-57% winner handicapper in the major sports over the past 8 years). I know that the Books can be beaten, but, to be clear, that presupposes a proper money management system and alot of work handicapping – and neither is more important than the other ! And to be crystal clear, if anyone out there thinks that they can consistently do better than 55%-57% over the long-term, I would lay pretty heavy odds that you are either a tout or a liar. There is no free lunch here and if you are willing to put in the time and the effort, and, no doubt just as important, exercise the strictest discipline in managing your money the right way, your ROI investing in the sports market will far exceed your average returns in any other endeavor, as you point out in your blog.

    My primary question is the legality of it all – how the fund would be set up, where your operation would be run, etc. As you know all too well, the Reg D Rules are pretty strict (e.g. sophisticated investors, fund size, etc), the SEC is cracking down on hedge funds, and we all know the current state of affairs in Washington with respect to wagering on sports. That said, my sports investment is by far my best investment and I, like you, would love to share that wealth but want to make sure that it would be totally, 100% legal.

    If you have or are already doing the fund, I would love to be able to pick your brain on this a bit more.

    Congrats on the Mavs season this year. I am not a Dallas resident (live in the Northeast), but my seven year old Peter is a huge Mavs fan (although he cried when you traded van exel)……

    Comment by Bob -

  247. My snooping around led me to the company that hosts his blog. It’s a company called Weblogs, Inc. and he is the seed investor in that company. It appears that they are targeting their product to different niches and currently have 50 blogs up and running. This is not a blogger for the average person, it seems like it is invite only with editors to boot.

    Comment by runescape money -

  248. Similarly, a sudden change in the futures vs fair value will have an effect on heavily traded stocks that can last as long as several minutes. And important developments at a particular company will most likely have an effect on the sister stocks in its sector that will a) not be immediately reflected in their stock prices and b) last for several hours, days, or even weeks. (What I’m suggesting with these last two points is that some stock market events are not independent of each other in the same fashion that you’d expect successive rolls of the die to be)

    Comment by wow powerleveling -

  249. Mark,

    I am a college senior majoring in finance who has been analyzing the sports betting market for the past 5 months. I have found some interesting trends and concepts I think you would find very appealing given your background in finance. I’m not sure if you check this, but if you do shoot me an e-mail and I can throw some ideas your way.

    Dan

    Comment by Dan Cullen -

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    Comment by KHALIL -

  251. We have performed something similar for the soccer betting side.

    Our product TSP will fully automate the steps required in soccer betting. The following link is a document which captures our work in using TSP to predict for World Cup 2006.

    http://www.testnologies.com/tsp
    http://www.testnologies.com/tsp/worldcup.pdf

    Those we are unsuccessful to select the real winner (i.e. Italy), we have managed to generate a 450% return for our investment.

    Thank you,

    Paul Hsi
    Testnologies Ltd.

    Comment by Paul Hsi -

  252. If stock trading is gambling, have you tried playing cards then? The trade off will be much bigger.

    Comment by Jason McKormick -

  253. Sportsgambling is a great hobby if you know how to manage your money correctly! I have a website I use to communicate to a few buddies of money, and we have been on a tear. Best of luck with your new adventure and feel free to check us out @ http://www.picksbypikes.com

    Thanks,

    Pikes

    http://www.picksbypikes.com

    Comment by Pikes -

  254. I am curious what kind of returns have you have seen thus far and what % of these returns will go back to a good cause? I know your a good philanthropist so I hope you are aiming to be another Warren Buffet with your winnings! Good luck and great season… Max

    Comment by Max Wasilko -

  255. Thanks bEN

    Comment by VJ -

  256. This sounds good. I’m into sports betting and playing the odds. I use a program called SureBetPro not sure if you herd of it before. But it helps pick threw the bookkeepers and find winners.

    Comment by Online Sportsbook -

  257. Mark,
    Which do you think is the sharper investor, Wayne Rogers or Ben Stein?
    By the way, here’s five dollars that says that you can’t come up with my actual middle name within 24 hours by using your techie know-how or financial reach. lol.

    Comment by squaw cheng -

  258. Mr. Cuban,
    I am very excited to see how you feel about the sports betting industry. I think you could do very well in this business, reputation is an absolute key in the world of online sportsbooks.
    Great job with the Mavs, keep on with the ” Cuban ” style.
    Alex Whiteman
    http://www.sportsbettingpress.com

    Comment by Alex Whiteman -

  259. I hope you are not serious about what you are saying and only saying these things to create polarization for your webblogs sake.

    I have always admired you from afar but now you are just talking nonsense. I will believe you are doing this for the sake of argument.

    Trading, like gambling, is all about money management not about being right or wrong. Difference is when you are wrong in trading, you do not need to lose 100% of your investment. Also, can you add more money to an existing bet DURING the game when a rout is on?? I can in trading.

    Comment by Greg Cardelli -

  260. I hope you are not serious about what you are saying and only saying these things to create polarization for your webblogs sake.

    I have always admired you from afar but now you are just talking nonsense. I will believe you are doing this for the sake of argument.

    Trading, like gambling, is all about money management not about being right or wrong. Difference is when you are wrong in trading, you do not need to lose 100% of your investment. Also, can you add more money to an existing bet DURING the game when a rout is on?? I can in trading.

    Comment by Greg Cardelli -

  261. vj, There’s quite often people looking for others with your sort of skills background on the betfair forums – might be worth a gander…..

    Comment by bEN -

  262. You may be more most other people have the needed experience in different aspcts and sides of sport finances, so this migh be a great idea indeed.
    I wish you good luck with it.

    Comment by Michael -

  263. I am a real beleiver in using statistics and alogorythyms in making your picks, depsite what many professionals say out there. Statistics can be a really good tool and in deciding what team to bet on. I agree its a lot like the stock market

    Comment by Betting -

  264. Dear Mr. Cuban-

    I’ve been a successful “Sharp” or professional sports gambler for the past year now. I was curious if you were still creating a hedge fund for gambling. I would to be a part of it in some way. You are exactly right about gambling. It’s really no different from the market. I use statistics and mathematics to make wagers and can give you me documented evidence of my success. Thanks and good luck today against the Spurs.

    Comment by Darren Brown -

  265. I truly love this idea and I actually have been doing this for some years now (always relatively small amounts of money) with good %’s returns. I started 2 months ago doing it with more serious money and only exposing myself to 1% of the AUM and am at the moment 5% YTD with very low volatility, which is above my personal target (of 2% monthly). I use mathematical models and I do spreads every time I can. I bet on every sport since its all mathematics (mainly soccer, tennis, snooker and horseracing)
    This is the job I truly want to do (at the moment am a senior analyst for a fund of hedge funds) but can’t find anybody that is actually doing it. I know that this idea didn’t go forward but does anybody have an insight on where and how can I find a job directly related to sports betting?
    Truly appreciate any feedback on this
    Sincerely

    Comment by VJ -

  266. All these people looking for your money Mark!All these “so called” experts. I’m only an expert in software development, so I can’t help you. Good luck though in your venture!

    Comment by Mik -

  267. I didn’t read through all the other postings but since the house is usually pretty accurate in predicting spreads – perhaps you should have a good amount of your fund gamble on gambling instruments called teasers where you change the odds to add 4 – 5pts for each bet but ofcourse the odds change. Anyways just an idea.

    Michel
    http://www.blogforcapital.com

    Comment by Michel -

  268. My company develops exchange betting technologies, and closely partnered with a market leader in this domain. One of the things you should definitely arm your “best and brightest” hedge betting personnnel is with the tools they need to be competitive and efficient in seeking and monitoring the shifting opportunities that exist especially in highly volatile, liquid markets. Semi-automation coupled with domain expertise of your sportsbetting analysts should limit your liabilties nicely.

    Cheers,

    M. Copeland
    http://www.betxtech.com

    Comment by M. Copeland -

  269. I am interested in investing in such a hedge fund. Have you started it yet? Are you allowing new investors to enter?
    Thanks
    Robert

    Comment by Robert L. Berkebile -

  270. Oh and you guys forming hedge funds and offering people 105%’s back are scam artists, I’ve seen these many times. also what makes a hedge fund a stupid thing to invest is most books have limits on wagers and the more money you have the harder it gets to find enough books to hedge with. Also any individual can do it for themsleves more effeciently.

    so Mark forget the fund just do it for yourself.

    Comment by George -

  271. Obvisouly almost all of the people leaving comments here dont even know what HEDGE BETTING is.It doesnt matter who wins the spread….you win regardless of outcome unless they tie the line then you push on both bets. you only win a small percent of money wagered say 2% but there’s oppourtunities to do this every week. hmm banks give at best 4% interest per year you can make this with 1 game. thats not too mention sign up bonuses and reload bonuses.

    funny shit on here some of these dumbasses think hes looking for professional handicappers to pick games LMAO. Hedging is gambling without the chance of losing people.

    GL mark

    Comment by George -

  272. Whatever mark Cuban plans to get is hands on next is a sure fire approval from me. This idea is genious. Why bet on stocks, excuse me invest in stocks and take a risk. When you can guarantee a profit every single time with an arbitrage. mark let me know about this I will surely join your cause. I would love to invest…

    Comment by Ali -

  273. good points on smart vs dumb money. psycology/behavior analysis was what helped me produce 69% win pct in NFL this season.

    still.. i think that trading stocks based on chart patterns is a superior method of making money than sports betting.. because it’s like blackjack with a rule saying you can pull back 95% of your bet after seeing your cards and the dealer’s up card.

    riding a losing investment into the ground is insane. the price itself tells you if you were wrong or right. i like to be proven right in a relatively short amount of time. otherwise, bye bye.

    Comment by Buck Woodford -

  274. Please feel free to check our risk-free results for this type of investment.

    I will try to post further here later but until then check our site for further details.

    Best Wishes

    Ray

    http://www.arbhunters.co.uk
    http://www,sports-tipping.com

    Comment by Ray -

  275. Interesting idea. The hedging fund that you are suggesting is very tempting. Only if I had the money to do something like that. To tell you the truth, I have some ideas of my own about sports betting and would gladly like to share them. Cantact me if you wish. My e-mail is ohmygod0@stanford.edu. Best wishes to you all

    Mark Chen

    Comment by Mark Chen -

  276. Mark,

    Interesting idea…like using the techniques employed by the MIT team against Las Vegas.

    Knowing when the probabilities are on your side and then betting heavily can also be accomplished by observing the pricing inefficiencies between the index futures and spot market: place the long/short bet on index futures or ETFs. See http://www.indexarb.com for probabilistic trigger levels.

    Iam Tbone

    Comment by Iam Tbone -

  277. try ur luck here if u want to test your sports betting skills, also available online texas holdem poker, goodluck

    Comment by Sportsbetting and Texas Holem Poker -

  278. Dear Mark (or web stand-in)

    Like most innovative ideas, this notion seems quite promising. We’re developing something a bit more tangible and have the potential to affect much more than just wagering on sports. Let’s bring down the house.

    The PrincetonMIT_alum

    Comment by PrincetonMIT_alum -

  279. Dear Mark (or web stand-in)

    Like most innovative ideas, this notion seems quite promising. We’re developing something a bit more tangible and have the potential to affect much more than just wagering on sports. Let’s bring down the house.

    The PrincetonMIT_alum

    Comment by PrincetonMIT_alum -

  280. The idea of using sports betting as a investment isn’t new. But I think that nobody has had the resources to really start a hedge fund focused on this strategy. I myself am a student at Indiana University where on my spare time I conduct arbitrage between different sportsbooks. Props to Mark!!

    Comment by Eaton Zhou -

  281. Mark,

    Could you cry anymore during tonight’s game? Suck it up.

    Comment by Gary Meyers -

  282. Mark,
    How do I apply?

    Comment by George Waters -

  283. it’s a good thing to invest in ANYTHING, as long as you have an important edge over the other players. The same applies to business. Get an edge or leave the marketplace. It’s that simple.

    Comment by Beurstips -

  284. I like the basics of Mark’s idea and also have some ideas of my own about how a sports hedge fund may work.
    I am seriously considering investing 5,000 dollars or my whole life savings with a sportsbook. I want to take that 5,000 and win 100 dollars with every cover. So, my first bet would be for 100$. If I lose that bet then I will bet 200$ plus lost juice in order to win 100$. If I lose that bet then I have to bet 400. If I lose that one then I have to bet 800 and if lose that one also then I’ll have one more 1600$ bet to take my bankroll to 5,100$. The problem with this thinking is that eventually I will lose 5 bets in a row. It could be after 68 wins without a five game losing streak. The extra 6,800$ will give me an extra chance taking the total d day number to 6 straight loses. However, if I was in a fund of 3 other like minded investors with a total bankroll of 20,000$ we could help each other out. If one of us is on a losing streak it would be in the others best interest to help get the other out of the losing streak. In our fund of four our main job would be to make sure none of us get into that type of trouble. If we get into trouble early an individual and teammates could never miss more than 7 picks in a row. Once an individual misses 7 in a row he takes out his whole pod’s bankroll. However, If we were part of a larger group, say Mark Cubans hedge fund then we could have an additional 6 straight losses before someone will have to make a million dollar bet. But why would Mark Cuban make a million dollar bet to save one of his pods 5,000 dollar members? Its easy, he would take a percentage of all members profits. I have reviewed some peoples free picks and have found one individual who has never lost 5 bets in a row and has a total of 68 wins or under my system a net profit of 6,800$. If Mark would take 10% of this individual profits it would net him a profit of 680$. Now if you have 1,000 members in this hedge fund and on average they turn a profit of 2,500$ then you could take home 250,000 dollars. The risk for Mark would be small since he has enough capital to keep betting till he wins. Once he wins we all win and he isnt out a penny. Maybe he raises the insurance on problem members so that they may have to pay 20% on profits.
    As long as collectively as a whole we never miss 14 straight picks we would all make money. At first its up to the individual pods to avoid 7 straight losses. With 4 individuals working together profits will be easier to come by. If a pod has missed 5 picks in a row they will have to bear down and come together to ensure a proper bet. They would also have the support of surrounding NBA pods in the same hedge fund.
    If anyone is interested in this idea I’d love to hear some feedback.

    Comment by Joshua -

  285. Mr.Cuban,

    You rblog entry appealed to me. Even though I am a Value Investing guy myself, my readers might be interested in different methodology. Part of your blog message with a link to your site in my own blog at http://texandesi.blogspot.com/2004/12/mark-cubans-big-bet.html
    Since you do not provide a trackback link, I am putting this information in your comments section.

    Comment by Texan Desi -

  286. Hey Mark, You are right that most possible sports bets are stupid money (too close to call). You’ll notice that most sports betting experts filter out 95% of the possible bets, which cover all popular sports. Odds makers are excellent at their job, and the experts know that. They find the 5% of the bets that represent smart money, and ignore those possible bets that are too close to call.

    Comment by Froman -

  287. All I got to say is this:

    How do I apply for a job in this fund? 🙂

    Comment by Anton Online -

  288. Mark,

    Your article about starting a gambling hedgefund may be a publicity stunt, or it might be for real. Your facts about options trading on equities are true, Futures and options are derivative bets on the underlying and utilize a lot of leverage. The average person who takes these bets cannot hold the position if they go against them, or as with case with options expire worthless, as the time value of money premium erodes. Many hedgefund managers, including myself, will not touch Futures or Options, and consider them pure gambling bets, or “bucket shops.”

    Liquidity and scalability also become a problem when you consider derivatives markets, like the options markets. If you are to make huge bets as a market participant, you might find that your size changes the odds or you will not find a market to match your position. If you own the casino, then liquidity is not an issue, and you make your money from the spread, and you can scale the size indefinitely.

    You are right about inefficient markets. The market is NOT efficient, and all of these Efficient Market Theories that are taught in academia have and will continue to be proven wrong. Warren Buffett has said that if the market was efficient, he would be a beggar on the street with a tin cup. This is coming from the 2nd richest man, whom you consider is a “gambler” because he has made his money in the stock market by allocating capital to publicly traded companies, and exploiting market and valuation inefficiencies. If you have an excel spreadsheet handy, plug in 28.6% return for 37 years, and compound that for the final number. For someone whom started at age 26 with 100 dollars in his LP (yes, Buffett started his career with a Limited Partnership, or what is now commonly referred to as a Hedgefund).

    I would encourage you to continue to exploit market inefficiencies, as you see them. I don’t know anyone else that sold a company to Yahoo for 2 billion dollars. That was a market inefficiency, and you were able to exploit it fully.

    Owning a casino would be something you should look into. Just about 5 years ago, the Horseshoe had several bids for it, I think around 30 or 40MM. I could see what a bargain it was, even though it had a lot of debt, the intrinsic value was much greater. I think Harrah’s finally bought it. What a move that would have been for you to buy the Horseshoe, and take on the Benny Binion legacy, while poker and the WSOP grows in participation, publicity, and interest.

    Another idea, you can start a Fund of Funds or (FOF), a Fund of Hedgefunds. You would then have the responsibility to research, scout out, and invest in the best money managers. It is very similar to running and owning an NBA basketball team. Who knows, maybe with your management style, leadership, and being in the public eye, you would be able to attract many large institutional investors, and grow a FOF into a 100BLN + venture, as well as discover the next “warren buffett”s and “george soros”s along the way.

    John Chalekson

    Comment by John Chalekson -

  289. So you want to run a hedge fund? Well, you had better think outside of the box to separate yourself from the crowd (most hedge funds follow the crowd). Very few people understand that when you trade in the markets or play a hand of poker you are looking for “tells” or being able to read human emotion or market psychology. While it may be true that you cannot predict a company’s future balance sheets or a poker player’s hand, you most certainly can read the “tells” or patterns left by human psychology. Whether poker, stocks, bonds, etc. we are playing people (i.e. emotion). The market or the gambling games are just tools to play people.

    The problem with hedge funds is that most hedge fund managers are novices and momentum players. In other words, they follow the crowd. For example, the majority of hedge funds have a net long position at market tops, including right now, this very moment in time. As of now, the crowd is giving its “tells”, they are telling us all that they are confident that gold and the stock market (to name a couple) are going up? Well, if everyone agrees, then they have all of their money (or cards) on the table, don’t they? Who’s left to buy? While the hedge funds are net long, the market is topping and is poised for a reversal. This next week should be interesting and fun for those of us ready to go short… (The crowd is more bullish now than at the 2000 top.)

    Also, I would stay far away from bonds… See, I don’t agree with the crowd on inflation? (It’s funny how bulls and bears all think that we are going to see inflation?)

    Define your edge, don’t be the crowd. There are methods to read the patterns of human psychology, which have wonderful forecasting potential or to provide a very objective analysis.

    Enough rant for today, back to the army/navy game… (navy is killing army, 28-7)

    Comment by Ryan -

  290. * Forget about hedge funds – I’ll make you real money.

    Comment by David Online -

  291. Mark,

    I think this is an idea that has some merit. As an internet thoroughbred handicpper I have enjoyed the racing profits for a while now. I have worked with many clients in instructing them on how to create a constant cash flow using the horses.

    I’ve just developed a system for automated timing of the horses that you should start to see nationally in the very near future. Yep, another cash cow.

    I am now in the middle of setting up a computerized operation for handicapping. My latest book on the subject has been turned into trial software and after a year of tweeking and successful testing it is being taken to the next level. I am just a few servers away from going private and working with a few special clients. Interested? 🙂

    Comment by M Harris -

  292. Mark,
    I have been a ProAm Gambler in the arena of sports for a long time. It started when I was a kid and I started to memorize sports stats. It isn’t an addiction although I am pretty good at Keno too. I don’t understand how that got started but growing up on an Indian Reservation can give you quick jump start.

    Let me know — I am in the process of starting a “Sports Futures Blog” in which I will layout my predictions for future games. We’ll see how that goes maybe you will be interested.

    Krug

    Comment by David Krug -

  293. Some general comments… Regardless of what Mark has up his sleeve with this – he’s dead on with his assertion that ‘picking’ stocks, etc. is NO DIFFERENT than betting on sports. In both, you are predicting that an individual or team of individuals will PERFORM (or WON’T perform). If they perform as you expected (the CEO, the managers, the coach, the players), AND unexpected outside forces don’t get in the way, you will make money. In both, you can use information, research, hunches, emotion, tips, advice, mathematical formulas, technical systems, or a combination of all of the above! In both you can use discipline and money management to be successful at it. And both the outcomes of sporting events and the movement of stock prices are WILDLY unpredictable. In both – the people making the real money are people on the ‘other’ side from the masses (brokers, advisors, fund managers, exchanges, sports books) or the people ‘in the know’. The people that make the real money are the people immune to the outcome of the events themselves, who either have a winning formula, or who sell an ‘entry fee’ so all of us can play the game… We will share more opinions on this in an upcoming issue of our monthly newsletter.

    Mark stated some accurate things in his post. Yes, sportsbooks know the difference between smart and dumb money, and yes, they release lines accordingly – to attract as much money as possible on BOTH sides. He is also right that – for the most part – it is the same people over and over again who are winning, and that SPECIALIZATION and ACCESS to INFORMATION is the key to success. The fact is – ANYONE can beat the sportsbooks, especially in baseball, college football and college basketball. The bottom line is most people don’t have the TIME to obtain the information they need to win, or develop a successful formula on their own. For the people who win consistently – it is a FULL TIME job.

    It seems as though plugging is OK in this type of forum – so for those of you interested in something similar to what Mark is talking about (it’s not a fund, but a private club – you place your own wagers) – check out the site below. It’s part of the ‘SMART money’ he’s referring to – the people who bet the same way over and over again. The system banks on the unpredictable – it ONLY plays underdogs and ONLY Money Lines. It’s a progressive system that’s worked steadily since its inception…
    http://www.profitlocksystem.com/

    Some specific comments:

    #21 – Yes, the Palms has a sportsbook. No, they do not accept NBA wagers. The NBA is funny – one of the WNBA teams played it’s home games in a casino and they want to bring a franchise to Las Vegas (which is where the Warriors or Clippers should move, but that’s a separate issue) but like all other leagues they are forced to publicly ‘frown’ on anything gaming related. This adds to the brilliance of Mark’s post from a hype-factor. He knew the papers would cover it and it would stir up controversy.

    #40 – Nice. You get it. We’re on the quantitative side.

    #86 – Good post. I can tell you bet. And you’re right – there is nothing more enjoyable than being the underdog and going after the house. Come join us!

    #102 – Brilliant! This is an example of someone SO SURE of an outcome he posted it for everyone to see. He probably spent three hours researching why this game would go over the total. In doing so he proved our theory that picking isn’t easy. Wizards 95 – Nets 68… Total 163… way off…

    #107 – Some good stuff here. But do the rest of you see what I’m talking about with the TIME component. The average busy executive doesn’t have time to do what this guy does. Skybox, we refer ATS services – I’d like to check yours out – what’s your web site address?

    #108 – Of course Coke won’t go to zero – but the stock could drop $1.00. And if you invested 1,000 shares and had a stop-loss in place or sold it before it went back up – you LOSE money! Isn’t that the same as losing a $1,000 money-line bet? Yes, you could buy more shares, just as you could bet on the same team again in their next game and double your bet until they win/cover… And what book are you talking about that moves with a small bet? None of the top 50, that’s for sure. One thing you’re dead on about – I certainly believe you that in five years not one of your customers has made money – the public can’t pick ATS winners if their lives depended on it… Regarding your bet: I will bet you ANY AMOUNT OF MONEY – no kidding – that our 5-year returns will be positive. After our first full season offering our service to members we finished up 61,448 units in PROFIT. So far this season we’re up 19,165 (as of 11/30)…

    #113 – Sports books don’t mind ‘smart money’ it gives them balance and reduces their liability. And imagine a dozen or so $10k wagers per sport, every day, 365 days a year. That could produce some sizable returns… BTW, you don’t have to pay a 10% ‘vig’ with Money Line bets. And you can make money at 30% if you play the underdogs and have the right money management system…

    #123 – The key is FREQUENCY. There are money lines on 10 – 100 domestic events a day – even more on weekends – and even more when you factor in International sports… When you factor in sports in Europe, Australia and Asia, you could literally bet 24/7…

    #132 – Some intelligent stuff here. People into sports betting should read this.

    #133 – You’re close. Very close. Couple of things – yes there are ‘maximums’ – as you put it – in sports. They’re called limits. So you must find the right unit level to STOP any given path of wagers. And secondly, it’s the opposite as you’ve stated – you MUST use ONLY money lines, parlays, etc. (subsequent wagers must be at +110 or higher to achieve any kind of decent profits over the long haul). And you MUST bet on multiple things at once. Actually, the more the better. If we knew our members had unlimited bankroll we would release dozens more plays per day than we do. But there’s the practical element that not everyone has the same bankroll…

    #136 – You need us too!

    To conclude… another fine effort by Mark Cuban, the new hype-master. Thank you for giving us ‘little people’ the opportunity to share our thoughts in these reply posts…

    Comment by B.V. -

  294. I am going to “roll the dice” and start a hedge fund for all of your hedge funds.

    Comment by Nathan Schank -

  295. I see a lot of people referring to gambling as a “zero sum game”. INCORRECT. A roulette wheel is a “zero sum game”; however, a horse race or a sports bet isn’t NECESSARILY a zero sum game.

    The most exploitable gaming market is horse racing. Yes, the takeout is steep, but the market is often grossly inefficient, despite the incredible amount of information available and attainable- specifically the exotics pools. Typical handicappers do not take the effects of correlation in to account when they bet into the exacta or trifecta pools, creating payoffs often much greater than the actual probability of occurance. (The classic example would be two favored, speed type horses running exach other in to the ground- while one will often hold on for 1st or 2nd, the probablility they both will is often much lower than their favored exacta or trifecta payoff, creating a tremendous betting opportunity with a logical mid to longshot picking up the pieces.) The ability to hedge with (or against) multi-race wagers allows money management on superexotics like pick-6’s.

    The final piece of the puzzle is futures bets- perhaps the fastest 2YO in the country was 200-1 to win the Kentucky Derby this year on January 1st, simply because not enough people did their homework on Philadelphia Park. What other market would give you that kind of odds?

    Comment by Phil -

  296. Mark,

    Great idea good luck with it! I am sure it will be successful. Keep us updated to how it goes.

    Derrick

    Comment by Derrick -

  297. In Response to skybox from post #107 I agree with the haltime strategies and have had the same vision of setting up a gambling network on no name college campuses across the country. I have been kicked off a website for betting halftime lines because they said I had to bet 50% game lines and 50% halftime lines because they said halftime lines are weak. I would be interested in helping develop your network or being apart of it. You can email me at joesb26@hotmail.com.

    Comment by Joe -

  298. “Posted Dec 1, 2004, 3:33 PM ET by John Camacho
    Enjoy!

    Date placed:
    Dec 01, 2004 3:24p Single
    Basketball – NBA Lines Total
    Game can be seen on YES, Comcast
    (701) New Jersey Nets vs. (702) Washington Wizards Over 184 Wed@7:05p

    Risk $1600.57 to win $1450.97”

    Well Mark, looks like you can eliminate at least one person from your “job search”!

    Comment by Jesse -

  299. Mark,

    I work as an associate analyst at a large Toronto investment bank. I am also an avid sports enthusiast that has bet on sports (currently the gm of a fantasy football and basketball league) and consistently won.

    I have actually suggested your idea to a number of friends on multiple occasions before I read todays article in the financial post (most look at me oddly, but many ‘get’ the concept and love the idea).

    I advise pension and hedge funds where to put their money. I also ‘invest’ in sports. Quite frankly, the informational content, and regulatory environment is a lot clearer in sports, which makes sports a much more logical ‘investment’ vehicle.

    You are absolutely correct in your interpretation of the market. I’ll add that being a research analyst for a sports team is not dissimilar from being an analyst for a company…its just more sensible to ‘invest’ in sports.

    The key would be recruit personnel that know their sport inside and out but also have the financial background to understand markets and how they work.

    I bet you it would be very easy to recruit willing young grads of different disciplines to work for you at this kind of a firm. I personally would take a huge pay cut for the opportunity. Who wouldn’t be willing to give up a lot (given an appropriate upside of course) to spend my time researching players and stats in basketball as opposed to stocks? I do it for free anyways.

    If you can get by the regulatory hurdles, your potential market is huge. HUGE. You stand to make a lot of money on this one.

    If you are interested I really would love to work for you at this firm. Please dont hesitate to email me.

    Otherwise good luck – I’ll keep an eye out for your fund.

    Comment by Onirik Sarma -

  300. Mark,

    I work as an associate analyst at a large Toronto investment bank. I am also an avid sports enthusiast that has bet on sports (currently the gm of a fantasy football and basketball league) and consistently won.

    I have actually suggested your idea to a number of friends on multiple occasions before I read todays article in the financial post (most look at me oddly, but many ‘get’ the concept and love the idea).

    I advise pension and hedge funds where to put their money. I also ‘invest’ in sports. Quite frankly, the informational content, and regulatory environment is a lot clearer in sports, which makes sports a much more logical ‘investment’ vehicle.

    You are absolutely correct in your interpretation of the market. I’ll add that being a research analyst for a sports team is not dissimilar from being an analyst for a company…its just more sensible to ‘invest’ in sports.

    The key would be recruit personnel that know their sport inside and out but also have the financial background to understand markets and how they work.

    I bet you it would be very easy to recruit willing young grads of different disciplines to work for you at this kind of a firm. I personally would take a huge pay cut for the opportunity. Who wouldn’t be willing to give up a lot (given an appropriate upside of course) to spend my time researching players and stats in basketball as opposed to stocks? I do it for free anyways.

    If you can get by the regulatory hurdles, your potential market is huge. HUGE. You stand to make a lot of money on this one.

    If you are interested I really would love to work for you at this firm. Please dont hesitate to email me.

    Otherwise good luck – I’ll keep an eye out for your fund.

    Comment by Onirik Sarma -

  301. Awesome post. I’ve never understood why the stock market is socially acceptable while sports betting has the stereotype of drunk gambling addicts. They’re both the same thing – gambling.

    Comment by lindsay lohan -

  302. (118) BB great point…..How does Weblogs Inc make money?

    Comment by Sterling Wright -

  303. From a pure gambling and statistical perspective this won’t work. Gambling has house edges, mathematically built in to ALL gambling games. Take for instance roulette, the house edge is 5.2% and in blackjack the house edge is approximately 1.5% (depending on which type of game you play). The laws of large numbers tells you that if you play enough times you will lose. The same thing applies in sports gambling. Let’s take the example of picking an NFL football game vs the point spread. The house/casino sets the point spread in such a way that splits the money wagered as evenly possible on both teams. It’s a very efficient system, and what the house does to gaurantee themselves a profit is to set payouts at something like $10 on every $11 bet. If the house can split the money wagered evenly between the two bets, they make out like bandits.

    Mr Cuban, if you want to make money gambling, I’d recommend that you open up your own Casino.

    Fun idea, but not a money maker.

    vr

    Xeifrank

    Comment by Franklin Xeimeister -

  304. Intriguing idea. As with numerous concepts, many are skeptical at first, but then the legitimacy of the business catches on. I, for one, think it is innovative and will be anxious to see how well it does. It will also be interesting to see how both the NBA and the different financial regulatory agencies react to this concept. Looking for any help, Mr. Cuban?

    Comment by Jason -

  305. In response to #136:

    “Uconn up by 17 with .03 on the clock Dana Barrows ( Ithink?) takes the inbound pass and throws it in from 3/4 court a freakin 3 pointer!!!! Put that in your quant black box and smoke it.”

    Us quants don’t need to figure this stuff out, cause Joe Six Pack can’t either. All we need to do is predict the non-random stuff better than Joe Six Pack.

    Comment by sports_quant@yahoo.com -

  306. This is all very funny to me. Mark has to be just finding this very amusing.
    In response to Poster #130. I love risk I love the action. I lost it all! More Than once.
    I am the”Stupid Money”. One of my worst defeats came in NCAA Bball UConn/BC line was 14.5
    Uconn up by 17 with .03 on the clock Dana Barrows ( Ithink?) takes the inbound pass and throws it in from 3/4 court a freakin 3 pointer!!!!
    Put that in your quant black box and smoke it.

    Comment by Amazing -

  307. Sounds intresting!

    Comment by Matthew Brown -

  308. Wow, the amount of posts on here is incredible.
    While I am not sure whether you are serious or just going for dry wit regarding the state iof the stock market, but here’s what I had to say on http://thenats.blogspot.com/2004/12/fool-proof.html when someone mentioned it to me (some of it was said tongue-in-cheek but I believe the theory is sound):

    ——
    So, when Don Money asked me if Mark Cuban’s hedge fund for sports gambling would be something I would invest in, I needed to post my “if I only lived in Vegas” musings to answer fully.

    Yes, DM, I would, but only if Mr. Cuban met with me for a few minutes first to discuss what I believe is a foolproof plan for sports gambling if you had the time and money.

    Now, perhaps you may have heard of the doubling system in Blackjack. Essentially, that is a betting system that is “in theory” foolproof. What it requires is that you start off with a bet, let’s say $1. If you win, you put that $1 profit away, and you bet $1 again. Every time you lose, however, you double the bet–i.e., if you lose, you bet $2 next, then $4, then $8, etc. When you finally win a hand, you will have recouped your losses and actually won $1. You put that $1 profit away and start over.

    The casinos know this, which is the reason that blackjack tables have maximum bets (you thought it was because they didn’t want you to lose more than $5000 at a time?). The maximum bet rule stops the doubling system because while you will definitely win a hand eventually, you may actually lose the 11 or so hands in a row it will take you to be more than $5000 down at a $5-$10 minimum table. If there was no such maximum, and you had a serious bankroll, you could make blackjack a career and never lose. With the maximum limit, you can lose and lose a lot.

    Sports betting in Vegas is subject to no such maximums of which I know. Therefore, the doubling system should in theory be foolproof. The beauty of it is also that it doesn’t matter who you bet on, what sport, or what knowledge you have as long as you follow two important rules: 1) only bet on the 50-50 spread and over/under lines (as opposed to odds, parlays, money lines, etc.) and 2) do not bet on multiple things at once.

    This works especially well during baseball season (for over/under run totals) [note: thenats.blogspot.com is obviously a DC baseball site] when there are multiple game starts throughout the day. Assuming you start on the first day of the season, figure about 190 days of baseball and about two-three segments of games (2pm eastern, 8pm eastern, 11pm eastern) each day, so you’d be making about 500 bets a season. Let’s assume $100 per bet, each win gets you a profit of $100 (I’m ignoring the percentages that the casino takes–you can adjust the bets accordingly to take this into account ($110 to win $100 the first time, $231 to win $210 the second time, etc.)). With 50-50 odds, you should win approximately 250 of the bets leading to a profit of $25,000.

    Anyway, I don’t live in Vegas and I don’t have Mark Cuban’s bankroll. But, Mr. Cuban, if you use this strategy and add to your billions, I expect a small cut 🙂

    Comment by dexys -

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