This is a blog post by a professional investor who in the past also bet extensively on sports. He explains how he engaged in intense research to develop his strategies for betting on sports. In the post, he also explains how the lessons learned from successful sports betting also apply to investing.
Selection bias, over optimization, and model overfitting are serious problems in both sports and non-sports research. If you keep tweaking a strategy, it isn’t difficult to find betting angles that look like they have over 60% winners. But these almost never hold up in real time.
With sports wagering you need 52.4% winners to break even after costs. Sports betting legend Lem Banker became wealthy with an overall winning percentage of around 57%.
Sports research taught me the importance of having a simple strategy with intuitive logic behind it. You also need plenty of backtest data across different markets. This is what led me to momentum investing. It is simple, logical, and supported by over 200 years of backtest validation across nearly all markets.