Today, there are many sports investment exchanges (i.e. SMarkets, Betfair, Betdaq, Matchbook, etc.) that are offering investors a way of engaging in sports trading. According to an article by Kate Roney on CNBC, the Global Sports Financial Exchange (GSFE) has already been started by Zack Ward and ex-hockey pro Bernie Nicholls as a platform which allows investors to meet this demand and invest in professional teams. However, this is not the same as traditional investing in most cases. For investors with a more conservative mindset, it is typically a good idea to focus on the best sports stocks as a way of capitalizing on trends in these areas of the market.
But the recent interest in the Global Sports Financial Exchange shows that investors are ready to start moving into the world of sports investing. The investor gets paid dividends for holding stocks of professional teams if those teams win. If they lose, the investor does not lose all his/her money. In this way, if the teams on which the investor has invested do well, the investor earns dividend payments.
This sports exchange is a subsidiary of the AllSportsMarket and it operates very much like a public stock. However, there are no business companies listed on it — instead, there are teams like the NBA, MLB, NFL, and NHL. There were at least 6,000 investors by December 2017, and the numbers have increased since then. According to other experts, investors from 81 countries have stocks related to professional sports teams on this exchange now. GSFE allows investors to capitalize on long-term and strategic thinking rather than winning or losing bets in the short run and either winning a fortune or losing all their investment in one go. As such, GSFE can be termed as a Futures market.
The fundamental principle behind the formation of this exchanges us that while bettors tend to own a bit of the team and the investor has a little money in the success of the team. Thus, it involves both stock market fundamentals and principles of future investments. On this exchange, the short-term stock price of a sports team is determined by looking at its win/loss ratio. Over the long term, the stock price would be influenced by trades, ownership changes and the strength of the team's picks.
Investors can go either short or long, based on either information or hunches. If someone thinks the Vancouver Canucks would perform remarkably well in the future, he/she would be attracted to them even though they are in the basement of the league. These days, investors tend to buy low and sell high and therefore, they look for such teams that carry a low-price tag at present but hold a lot of potential for the future. In the other case, if the investor believes that a certain team is being hyped upon a bit too much for the future, he/she would try to be limited to taking short-only trades.
The GSFE behaves very much like a theoretical efficient free-market stock exchange as the stock prices of the various teams listed on it are determined by only the investors and no one else. According to its founder, this exchange has been built on the same pattern as the New York Stock exchange (which was built in 1817). At present, it allows trading in 614 shares, which are available for the investors to purchase. The market capitalization of the exchange is $1.57 billion, and by now the exchange has already paid $25 million in dividends.
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