Unable to bet on sports, players switch to stocks

When there were no more matches to bet, gamblers turned to the stock market as a fire-fighting measure in the middle of the Covid-19 season.

The Financial Times (FT) notes that brokerage firms have seen a sharp increase in the number of new accounts opened as football fans seek new ways to bet in the midst of the absence of live football.

The Covid-19 pandemic slammed the doors of economic and entertainment activities, in which almost all major football events were postponed. The 2020 Olympics in Tokyo, for example, are now postponed to July 2021 and the Euro 2020 soccer tournament will be held next year.

Against this backdrop, 3 out of 4 US brokerage firms, Charles Schwab, ETrade and Interactive Brokers, added a total of 780,000 new clients in March or April 2020, FT said.

Rich Repetto, Senior Research Analyst at Sandler O’Neill, told FT: “People are buried at home, and don’t have online sporting events. Therefore, people turn to transactions for entertainment in the context of a recovering market”.

The rise in new clients came at a critical moment when Charles Schwab, TD Ameritrade and ETrade all reduced the fees for trading individual stocks, ETFs, and options.

Big players like Ameritrade have also followed in the footsteps of newer players like Robinhood – who was one of the first brokerage firms to reduce transaction fees to zero.

New players entering the stock market in recent weeks include Dave Portnoy, CEO of sports news and betting website Barstool Sports. According to FT, Portnoy poured $ 3 million into his ETrade account on March 23 – the day when the US stock market started to recover.

Daniel Goodwin (39 years old) – who works in the legal industry in Indiana – told FT that his routine every night is to bet $ 100 on some sports game.

Now that is not possible. So, Goodwin said he opened a stock trading account at Ettrade, deposited several thousand USD and started buying stocks a few weeks ago.

“I’m not here in the long run – I just want to bet $ 1,000 on something to know if I will make a few hundred or not,” Mr Goodwin told FT.

“With sports, if I throw $ 1,000 at something, I lose everything very quickly, but in stocks, if the market is unfavorable, you can still cut loss,” he added.

The stock market has faced strong volatility in recent months, partly due to the Covid-19 pandemic and the oil price war between Saudi Arabia and Russia. Yet, since bottoming out on March 23, the stock market has largely recovered, thanks to the loosening of blockades and hopes for the Covid-19 vaccine.