- Billionaire investor said hedge fund could examine sports betting
- He admitted to cynicism regarding online sports wagering
- He didn’t elaborate on how AQR could get involved
AQR Capital Management, the hedge fund co-founded by Cliff Asness, is mulling entry into the world of sports wagering.
The billionaire investor made comments along those lines in the Thursday edition of Bloomberg’s “Odd Lots” podcast, noting AQR is “considering and looking” into sports betting, adding that the money manager is “known for its quantitative bets and sports could play into this expertise.”
This is incipient for us,” he said in the interview. “We are considering and looking at it.”
Though he acknowledged the sports betting market is opportunity-rich, Asness added he doesn’t want to overstate things because he admits to being “cynical about online sports betting.”
AQR’s Sports Betting Profile Remains to Be Seen
Asness didn’t elaborate on specific plans, including betting directly on games or acting as a market maker on exchanges, should AQR pursue sports betting. Should it go down the market-making route, it could find opportunity in the rapidly growing prediction markets space.
As just one example, Kalshi, the largest US prediction market operator by volume, has a market-making division, and the company is known to not charge trading fees to institutional investors and sharp bettors because it wants the liquidity those market participants provide. That liquidity keeps spreads tight on event contracts, which can serve as a source of allure for savvy retail traders.
As a quantitative hedge fund, AQR relies on algorithms, complex mathematical and statistical models, and computer programs to inform its investment process — competencies that could portend a logical transition to prediction markets, though Asness didn’t say as much in the Bloomberg interview.
To this point in the prediction markets cycle, it’s believed that most hedge funds, particularly larger ones like AQR, aren’t participating directly in event contracts, but those money managers are tapping data from venues such as Kalshi and Polymarket to gauge public sentiment and for use in predictive models.
AQR Has Some Sports Betting Exposure
In terms of investments in sports wagering stocks, that’s a possibility for AQR, as it is for any hedge fund. The money manager’s sprawling portfolio currently includes stakes in DraftKings (NASDAQ: DKNG) and FanDuel owner Flutter Entertainment (NYSE: FLUT), both of which are also entering the prediction markets arena. Those positions represent just 0.25% and 0.11%, respectively, of the hedge fund’s portfolio.
AQR also has small positions in MGM Resorts International (NYSE: MGM), which owns half of BetMGM, and Churchill Downs (NASDAQ: CHDN). It also owns shares of Las Vegas Sands (NYSE: LVS), which has no sports betting exposure.
The hedge fund has some indirect prediction markets exposure, too, as it owns shares of Polymarket investor Intercontinental Exchange (NYSE: ICE), as well as FanDuel prediction market partner CME Group (NASDAQ: CME).
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