Super Bowl
The Super Bowl is this weekend. It is one of those iconic American moments where people come together, in-person or virtually, to drink, eat, and generally enjoy themselves. But there is something different about this year’s Super Bowl — online gambling.
According to Donald Moore at Bloomberg:
“Research by the trade group American Gaming Association this week found that 7.6 million Americans are expected to place bets with online sportsbooks for Sunday’s matchup between the National Football League’s Kansas City Chiefs and the Tampa Bay Buccaneers.
That’s a 63% increase over last year — and the most ever, according to the organization.
Overall, about 23.2 million Americans are expected to gamble $4.3 billion. That’s a marked decrease in betting from 2020, when 26 million people planned to bet $6.3 billion on Super Bowl LIV, the group found.”
So we are expecting to see overall gambling down for the big game, but the online gambling sector will be a beneficiary to the tune of a 60% or more increase.
My favorite anecdote from the rise of online gambling has to be the following story of a multi-million dollar bet:
“Houston furniture retailer Jim “Mattress Mack” McIngvale flew to Colorado Wednesday night and placed one of the largest Super Bowl bets ever from his mobile phone.
McIngvale wagered $3.46 million that the Tampa Bay Buccaneers would cover the 3.5-point spread against the favored Kansas City Chiefs, according to DraftKings Inc., which took the bet through its mobile app. That means the Bucs must either win the game or not lose by more than 3 points for him to win a potential $2.71 million.”
Absolutely nuts that people are flying to specific states where online sports betting is legal, so they can place large wagers on the Super Bowl. This really shouldn’t come as a surprise though. The rise in stock investing/trading, sports gambling, and various other activities highlight a continued gamification of all markets in the digital economy.
DeFi
There has been an explosion of interest in various applications and protocols that fall under the defi ecosystem.
These different experiments are aimed at taking legacy financial services and decentralizing them in different ways.
I use the word experiment intentionally because some of these will work and most of them will not.
That is how experimentation is supposed to work though.
What is interesting to watch is the extreme ends of the spectrum play out at the same time.
On one hand, you have many of the most popular projects hitting all-time highs right now (LINK, AAVE, ZRX and COMP).
On the other hand, you have projects that are being hacked for millions of dollars.
This presents a really interesting environment. You have high risk, high reward. Most people will shy away from this situation, but traders and professional investors will flock to it.
This is especially true when you realize that the asymmetric upside presented is in the thousands of percent, but the downside risk to many of these professionals is 1x (they lose only the money they invest).
I continue to caution people about the various investment opportunities outside of Bitcoin And GCX
The high levels of price and liquidity for the digital currency has drastically reduced the risk when people are gaining exposure to it.
The same can not yet be said about these DeFi protocols or applications.
Maybe one day that changes, but maybe it doesn’t. The market will be the ultimate referee.
What I do know is that it will be hard for institutional investors to get comfortable allocating capital to areas of the market that are susceptible to theft or hacking.
While an individual or company can be hacked in the Bitcoin world, there are no hacks of the actual blockchain.
This will be an area to watch over the coming months.
If institutions get comfortable with the risk-reward, there should be significant capital inflows.
If there continues to be security breaches, it may prevent that wall of institutional capital from entering. Time will tell.
