Prompted by this question:

I really think that this question is about sports betting, even though it tries to present itself as relevant to quantitative finance. As such, I don't think that gambling questions should be permitted.

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6 Answers 6

up vote 12 down vote accepted

Arguably, betting on financial instruments is mathematically equivalent to betting on sports games. A sports game can be regarded as a weighted binary option. Since we're only interested in the mathematics behind the betting, I vote to allow questions like this.

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FWIW I agree. It is a form of probabilistic arbitrage, and that should be within our charter. –  Dirk Eddelbuettel Feb 7 '11 at 17:06
    
It seems like the consensus is that this should be permitted; I'll accept this answer unless things change dramatically. –  Shane Feb 7 '11 at 17:09
    
I Agree. The mathematical mechanisms and rules behind sports betting are the same as in financial markets, so the "Quantitative" part is supplied. And the fact, that it's a billion revenue business should be sufficient for the "Finance" part of the topic. As long as the questions are related not primarily on the sport, but on making money with it, it should be fine. –  Michael Sep 27 '12 at 22:45
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I really disagree with the other answers. The mathematics involved in finance also shows up other areas, such as weather forecasting and in poker and other games. Does that mean we should allow any kind of gambling questions? I really hope not. This site is about finance. If banks start trading swaps on the superbowl or there's a standardized futures contract for trading based on FIFA games, then it's fair game. Otherwise I think that it should be excluded.

Not only that, the consensus has already been to eliminate "accounting" and soft, beginner question. I would much rather introduce these before gambling questions. We're just opening ourselves up for a world of spam.

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I think you are talking about statistics in general. However there are some quant finance concepts, which albeit are part of statistics, but they are still not used in general as other statistics is used. If someone asks a question involving just monte-carlo simulation, then it'll be pretty obvious to construe if the question goes out of the scope of quant finance or not as monte-carlo simulation comes under general statistics than exclusively quant finance. However concepts like options theory are pretty much exclusively quant finance concepts, origin wise too. –  S_H Feb 7 '11 at 1:08
    
I think the weather comparison is misleading. Betting really is pricing in my view. –  Dirk Eddelbuettel Feb 7 '11 at 17:08
    
Minor note: there actually are weather-based options. I can almost see insurance companies buying options re the home team winning, since that usually results in more destruction. Almost. –  barrycarter Feb 7 '11 at 18:36
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We are still in private beta and our #1 goal should be to accumulate a wealth of on topic questions/answers when we go public beta. Gambling is far and few in between while we still have many on topic questions left unanswered. I'd say let focus our energy on getting those first and table this. There is no reason to not consider this at a later point.

As someone who run a good size community, I can tell you from first hand experience that it's easier to detect spammers if the questions are very on topic. Once you allow gambling, you just invite people who plant these questions that seem innocent at first glance but later put spam links in it.

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I think what barrycarter said is what I also want to say i.e. if the mathematics and statistics of the problem relates to quant finance then the question should be allowed. I would want the users to share their quant finance knowledge if that helps the questioner in their field.

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I still think sports betting is on topic iff an answer can apply quant finance principles. There has been a suggestion of treating it as a binary option (which sounds interesting), though there hasn't been any rigor in the discussion. I think the current answers on there aren't any good because the question hasn't been posed correctly.

It's possible the OP really didn't understand it himself and thus can't provide any clarity. In this respect, the stated question suffers from not being specific to a particular need.

Perhaps a better question would have come from actual research in this topic. With more experience in quantitatively determined sports forecasting, this question could have been Moneyball.

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There is also a market-making aspect to it that could be modeled.

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Computation of Expected Values and the like for the entire operation. –  dragunov Feb 8 '11 at 8:44
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