Equilibrium designs, builds, and invests in core infrastructure for the decentralized web. We are a global team of ~30 people who tackle challenges around security, privacy, and scaling.
A recent literature review Towards Sports Betting as a Financial Asset: An Investigative Analysis of Risk, Investment Potential, and Future Perspectives (2025) goes over some examples of hedge funds participating in predicting sports outcomes, as well as possible strategies and risk frameworks that allow betting to turn into an actual financial asset.
Recent history shows examples - London-based Stratagem raised a £25m systematic betting fund already in 2017, while Australia-based Priomha Capital reported ~17% annual ROI over 2010-2015 timespan. Yet it’s still unclear if either achieved long term success.
Here is how to think about it: sports betting wagers are like short-duration assets. Outcomes resolve quickly, so you get to re-use capital fast. Focus on a systematic strategy allows you to achieve steady performance.
Returns in these markets are not correlated to traditional markets - this creates a powerful utility in diversification.
In established markets like sports betting, raw sports data can be turned into a whole universe of investable signals - modern techniques like sentiment analysis and even in-play reinforcement learning can be used to adapt a model live.
Other approaches include things like stat-arbitrage, focusing on exploiting the odds between exchanges and making small amounts of money consistently.
Turning something that’s just “betting” or “gambling” into consistent results usually means two things:
Changing the participation strategy into something that relies more on alpha sourced from data that is reproducible across current and future markets
Applying risk controls — that might reduce outsized returns — but allow for more consistency in the returns. This is crucial for outside LPs.
For the strategy - Even though past public examples don’t reveal the secrets of consistently performing strategies, the backbone of high quality automated strategies is increasing: there are more high quality data partners than ever:
Teams like Sportradar, Genius Sports, Wyscout (football), Second Spectrum (NBA) etc. are bringing in high quality data across multiple sports. For example live sports data updates have become faster year-by-year, reaching sub-second updates in 2025.
For the risk management:
Bring in professional metrics like Sharpe, Sortino, max DD, time-to-recover, hit-rate vs. implied, Kelly fraction actually used, turnover, and ex-ante VaR/CVaR per horizon
Focus heavily on bankroll management and bet sizing. Diversify across different markets, sub-markets, bet types.
So this is where it gets more interesting: How could the increase of non-sports prediction markets affect all this?
👍 More Uncorrelated Markets = Less risk of absolute wipeout = Absolutely essential for external LP-based fund structures.
👎 Unlike sports markets with fast resolution times, lots of other prediction markets resolve slowly - this is an extra cost of capital. But it is also an opportunity for someone to fix this 😉
👍 Even though the alpha itself is different - the system for achieving it can be quite similar. Data pipelines, calibration, sizing, and decision-making can all map cleanly from sports to non-sports.
👍 If running a cross market / stat-arb book, more markets can mean more accessible volume / AUM. More platforms and proliferation of prediction markets with same markets also means more opportunities for arb.
🤓 Research: ZK Hack’s How to Build Hash Functions - Season 3 is starting, with Module 1 out now with JP Aumasson from Taurus doing a whiteboard explainer of a classic Hash Function.
📚 Reading: Blocmates - Prediction Markets Overview - catch up with the latest proliferation of new prediction markets, all with their own twists.
🎧 Listening: Signals and Threads - The Thermodynamics of Trading - If you want to hear some of the real top 1% optimisations made at firms like Jane Street for trading infrastructure, take a listen to this.
🧙♂️Magicblock launches their TEE-secured Ephemeral Rollups - allows for the running of private and compliant applications on top of Solana.
📚 Reading: We highly recommend "Careless People" by Sarah Wynn-Williams for its candid insights into the surprising realities of power dynamics in tech. It’s crazy to understand that movie-style situation DO happen in real life companies as well.
🎧 Listening: Two very different worlds collide when Sam Altman is interviewed by American people's guy Theo Von. Awkward and brilliant moments ensue.
No posts
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.