In June 2015, Nevada created a new law that essentially allows for the creation of sports betting mutual funds in the state, permitting out-of-state residents to invest in same and get in on the action of wagering on sports. In roughly a year, a handful of entrepreneurs have made sincere efforts to establish these mutual funds, including Chris Connelly, who started Contrarian Investments LLC.
It took some time for gaming regulators in Nevada to formalize rules surrounding these new types of sports betting mutual funds. Connelly's Contrarian Investments became one of the first approved funds once the regulations were formed, and he is off to a good start. He currently has returned 5% for his investors. The caveat is that the return is based on the outcome of a single game.
How Connelly's entrepreneurial enterprise works
Investors are able to put their money in Contrarian Investments LLC, which will turn around and invest it on the outcome of a sporting contest, as the entity sees fit. CG Technology, a Nevada based sportsbook, helped write the law and accepts the bets on behalf of the entity.
Investors will either receive returns or take losses depending on the performance of Contrarian Investments LLC, just like with a mutual fund. Connelly seeks to put his computer model and positive historical performance to work for his investors.
"With sportsbetting becoming more mainstream and the industry growing, I want to establish myself as the standard," said Connelly. "I want to be the Warren Buffet of this marketplace and show that sportsbetting is a legitimate investment by outperforming the major stock indexes, mutual funds and ETF's, making sportbetting a real investment option for all."
Connelly makes a big bet
Contrarian Investments was created roughly 6 months after the sports betting mutual funds law was passed. Connelly has placed a big bet in himself to make smart decisions with other peoples' money and based on a theory that others will simply want to hand over their assets and let Connelly take control.
Thus far, only one investment has been made. Connelly picked the San Antonio Spurs to cover a spread of -18 over the Grizzlies during the first round of this year's NBA Playoffs. The Spurs covered.
"I've only made one investment thus far, as a staple to my strategy is to be selective," said Connelly. "The fund is currently up 5% off of the one investment on the Spurs and I look to build on that as opportunities present themselves in the NBA playoffs."
How Connelly crafted his strategy in wagering on behalf of others
Connelly came up with the name Contrarian Investments based on his investment strategy -- betting against fluctuations caused by public perception through novice bettors' overreactions to trends and recent events.
"Betting against these fluctuations creates value for Contrarian Investments, providing an edge over the house, leading to positive returns over the long run in this market," said Connelly. "Using a complex computer model to identify sides that are over exposed, we bet against those positions yielding positive returns for our investors in the short and long term."
Connelly claimis that he has outperformed the Dow Jones industrial average in the last 4 years, posting average returns of 67.5% in each of those years.
Is there real potential in sports betting mutual funds?
Currently, Connelly only has a handful of investors. He admits that those invested have followed him and his success in sports betting for some years; however, Connelly says that he has a few investors "pending approval," which would push the fund to over $20,000. Right now, there is just under $20,000 in advisement.
Yet, the fund is only a little over 2 weeks old.
Connelly's target investor is the average investor looking to diversify his investments. He will risk 5.5% of an investor's initial deposit per wager.
Contrarian Investments is joined by other startups in the space that look to take advantage of a Nevada law that is still fairly new. Many experienced sports bettors see real potential to create new business opportunities through the law, which could expand in time.
"While still confined to Nevada for the near future, sports betting mutual funds could have a large impact on online sportsbooks in the future," said the editor of OnlineCasinoReports.com. "Once they become more prevalent, it will be interesting to see how these funds integrate themselves in the world of online gambling, in order to appeal to a wider crowd of potential investors."