Is Day Trading a Replacement for Football?

We’re About to Find Out
On Thursday, September 9th, 2020 the Kansas City Chiefs will face the Houston Texans on NBC in prime time. This game is poised to set new records for betting activity on a Week 1 NFL game. But will this surge last?

The boom in active trading has been nothing short of explosive, spurred by platforms like Robinhood and the removal of trading commissions by major brokers in the fall of 2019. Trading has never been easier or more accessible.
In the first half of 2020, Robinhood accounts grew by 30%. With popular stocks like Tesla, Zoom, and DraftKings soaring in value over the past few months, and the charts of SPY and QQQ looking like the "Cliff-Hangers" game on The Price Is Right, it’s likely that the average new retail investor has seen at least some positive trades and is feeling optimistic.

With no commissions eating into profits, day trading (or at least short-term trading) may seem like an appealing alternative to sports betting for those looking for some action. In most NFL bets, you wager $110 to win $100. For example, if the sportsbook takes in $110 on both the Chiefs and the Texans, the winning bettor (after considering the point spread) gets $210, and the sportsbook keeps the extra $10. Over time, that 10% commission on losing bets means you need to win over 52.4% of the time to stay profitable. Most bettors don’t achieve that long-term, so they either accept the losses as part of the fun or convince themselves they break even through selective memory.

On the other hand, anyone with an E*TRADE account can easily track their balance and see which trades have made money. You can forget the heartbreaks from teams like the Jaguars or Bears, but when you log in, you’re reminded of how your GE stock is worth far less than what you paid. A look at Tractor Supply (TSCO) might help lift your spirits again, though.

​Crossing Over
Some avid football bettors are now crossing over into the world of stock trading. High-profile figures like David Portnoy, the outspoken founder of Barstool Sports, have appeared multiple times on CNBC's Mad Money with Jim Cramer, while DraftKings ads have started airing during that show.

Is Stock Trading Replacing NFL Betting?
The NFL dominates sports betting, and academic research shows that baseball betting is often a substitute for NFL betting (source: SAGE Journals). When the NFL season kicks off, even the preseason, betting activity for baseball typically declines as it ramps up for football. In Gary Mayer's memoir, Bookie: My Life in Disorganized Crime, he details how he took baseball bets to keep his football clients engaged until the next NFL season.
Football bettors crave action, and this Thursday night, they’ll get it. With Andy Reid’s mustached Kansas City Chiefs taking the field and a Las Vegas total set at 54.5, this game promises to be high-scoring and full of excitement.

Will Bettors Abandon Stock Trading?
I doubt it, but there will be trade-offs. If the NFL season remains injury-free and the games are exciting, I predict that Monday morning trading will dip as bettors refocus on football. If the stock market continues its upward climb, NFL betting may lose some of its appeal as people put their energy into making money in the market. However, if the market hits a rough patch with a sustained downward trend, NFL betting and viewership will surge.

Personally, I’m hoping for both a strong market and exciting games, but whatever happens, there will undoubtedly be a balancing act between sports betting and stock trading.

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