Sports betting is not investing.
Wagering on the Los Angeles Lakers to beat the Golden State Warriors is the equivalent of a zero-sum game: your ROI is either a positive number if the bet lands, or -100% if it doesn’t.
That is a risk profile that smart investors will avoid at all costs.
But there are lessons that those investing can learn from the world of sports betting, particularly when it comes to understanding value theory.
Heads or Tails?
When betting online, individuals have access to thousands of pre-game and in-play markets across a comprehensive A-Z of sports. Some of these markets are ‘two way’, i.e. moneyline, spread, and total points, whereas others are ‘three way’ – such as a soccer game, in which the tie is possible.
Other categories of bets have multiple possible outcomes, e.g. the anytime touchdown scorer option in American football.
Malik Willis appreciation 👏
— NFL (@NFL) December 28, 2025
🧀 18-of-21 passing
🧀 348 total yards
🧀 3 touchdowns@packers | @malikwillispic.twitter.com/7FXMg945bm
It’s generally easier to calculate value in two-way betting markets. Imagine, if you will, that a sportsbook offers odds on a coin toss. This is a standard coin, so theoretical probability indicates that there’s a 50% chance it will land on heads, and 50% on tails.
This should be reflected in ‘fair’ odds of +100 on heads and +100 on tails. But let’s imagine that the sportsbook is offering odds of -200 on heads and +200 on tails. You would know, instinctively, that wagering on tails would be the smart thing to do here.
This isn’t investment advice: the next toss of the coin could still land on heads and your ROI would be -100%. But the application of value theory dictates that tails is the smart play in this scenario.
A similar notion can be applied to sports betting through the use of implied probability. Let’s imagine that the Pittsburgh Steelers are -188 to beat the Cleveland Browns (+150). You’ve done your research and some statistical analysis and decided that the Steelers have a higher percentage chance of winning this game than their implied probability of 65.2% (as dictated by odds of -188) suggests.
Therefore, betting on Pittsburgh would – in your eyes – be the value proposition.
Sports betting and investing are NOT the same. The risk in sports wagering is far too high for it to be considered an investment. But there are key lessons, particularly in the application of value theory, that investors can adopt when playing the stock market.
3️⃣ keys to Sunday's game against the Steelers
— Cleveland Browns (@Browns) December 27, 2025
Identifying Value Stocks
While sports bettors are using implied probability as a guide, investors may look to price-to-earnings ratio (P/E) as their value ‘vehicle’.
This is not an exact science by any means – nothing is in the turbulent world of stock trading, but many investing aficionados have turned to price-to-earnings ratio as a way of identifying value stocks, in the same way that bettors do with implied probability.
This P/E calculation compares a current share price relative to earnings per share results. In the most basic terms, a low P/E can be a sign that a stock is undervalued and that an upturn is possible.
As ever, whenever you invest your money there’s risk attached. But by understanding value theory – and how this can be applied to stock trading – at least you have a fundamental platform from which to start.
