Archives for 2020

EEOC Updated guidance for employers dealing with the COVID-19 pandemic

October 15, 2020 by Jules Halpern 4 Comments

EEOC Updates – Return to Work Issues

September 22nd, 2020 | By Jules Halpern Associates | COVID-19, EEOC, Employee Relations, Employment Law, Human Resources, Management

On September 8, The U.S. Equal Employment Opportunity Commission published updated guidance for employers dealing with the COVID-19 pandemic.

Requesting Information from Employees

Employers are permitted to ask why an employee has been absent from work and where employees have traveled. Organizations can also ask whether employees are experiencing COVID-19 symptoms or if they have been diagnosed with the virus if they are reporting to a physical workplace site. Employers may not ask whether an employee’s family member is experiencing COVID-19 symptoms, as asking medical information about family members is prohibited by federal law. However, they may ask whether an employee has come into contact with someone who has COVID-19 or someone who is symptomatic.

Revealing Information about Employees

Employers are not permitted to reveal the identity of an employee who has been diagnosed with COVID-19, as the ADA prohibits sharing employee medical information. However, to enable effective contact tracing and notification, other employees may be told that they have recently come into contact with someone who was diagnosed with COVID-19. While employees may be able to determine who that is in smaller workplace settings, employers are not allowed to confirm guesses as to the sick employee’s identity. Furthermore, employees are permitted to let their superiors know if another colleague is exhibiting COVID-19 symptoms.

Accommodations

Employers whose businesses are resuming workplace activity are not automatically required to provide teleworking to employees as a reasonable accommodation under the ADA, even if the employee has been working from home during the height of the pandemic. An interactive process must be engaged with the employee to determine whether teleworking is a feasible accommodation. However, the employee might consider the telework experience when reviewing new requests.

Delays may be experienced when engaging in the interactive process as a result of COVID-19. Employers and employees are encouraged to be flexible.

Workplace Practices

Supervisors need to take caution if they single out an employee to have their temperature taken or ask only one employee COVID-19 screening questions. The supervisor needs to have reasonable belief that the employee has the virus if they are singling them out from other employees.

Employers may prohibit employees from entering the workplace if they will not consent to screening or will not answer questions about their COVID-19 status and/or symptoms.

Supervisors who have access to confidential employee medical information need to safeguard that information even if working from home, as the ADA requires this information to be stored separately from regular employee records and business information.

Older workers may not be treated less favorably based on age when employers are choosing to offer flexibility. Lastly, employers may not base any adverse staffing decisions based on someone’s membership status in a protected EEOC category.

A Feather in the Cap of Robinhood Traders

October 6, 2020 by Paul Hoffman / Managing Editor Leave a Comment

Ignore the Anecdotes, Robinhood Traders are Solid Investors (Mostly)

Taking positions in bankrupt corporations, indefinitely berthed cruise lines, airline stocks, cannabis, unknown electric vehicle startups, equities that legendary investors are short, and Chinese retailers are all activities Robinhood traders have been ridiculed for. But is the reputation deserved? As a group, the performance of these self-directed investors can be measured. True analysis (not anecdotes) has tested the hypothesis that “they’re all nuts.” This analysis has been done covering the last two years’ worth of data on customers of the company. The results run counter to the reputation these presumably younger, inexperienced investors have been tagged with. The collective Robinhood buys and sells, as a portfolio did not underperform when compared to standard academic benchmark models.

What Was Learned

The National Bureau of Economic Research released a working paper late last month titled: “RETAIL RAW: WISDOM OF THE ROBINHOOD CROWD AND THE COVID CRISIS.” At the heart of the paper, the author, Ivo Welch, a finance professor at UCLA’s Anderson School of Management, looked at the holdings and results of all Robinhood transactions (since inception), using information available through *Robintrack. He then compared risk/reward to professional money managers’ performance, cash, and the overall market. His results uncovered that Robinhood user’s portfolios, on average, contain 5% of small, less liquid stocks that may be subject to much wider price swings. These smaller positions are often in companies the younger demographic is very familiar with. They also included industries that had either been beaten down, could potentially benefit from the COVID-19 economy, or those nearing a breakthrough of one kind or another. A much higher percentage of the positions were similar to those held in managed major index mutual funds. Although RH investors have created volume spikes and even price spikes in lesser-known companies, these were not their largest trading plays. By Professor Welch’s calculations, up to 60% of Robinhood investors’ holdings were stocks with large daily volumes. Companies with the heaviest weights in the average Robinhood portfolio according to the study include Ford Motor Co., General Electric Co., American Airlines Group Inc., and Walt Disney Co.

“The actual RH investors portfolio (ARH) was not as crazy as these ‘anecdotal holdings would suggest,” writes Ivo Welch. “Instead, most of the interest of RH investors revolved around larger and highly liquid firms.” The 5% held in smaller companies with lower volumes could easily be argued as appropriate or even prudent for the younger investor. It was additive to the aggregate portfolio outperformance.

New York Times, July 8, 2020

Smoothed Pandemic Crisis Selling

The RH self-directed investors are impacting price movements in ways unexpected by more experienced professionals. This is getting more attention from veteran traders as individuals now account for 20% of equity trading. This makes it important to understand them, and foolish to ignore. Welch’s paper provides that the composite model Robinhood equity portfolio has outperformed so far in 2020, and the presence of individual investors has possibly acted as a dampening force during a volatile environment. Whenever the stock market fell in 2020, spikes in retail buying occurred as early as the next day. Then, the second surge in RH volume usually occurred roughly three days after a spike down. Three days is about the time it takes to complete an ACH transfer and make sure there’s good funds in an account.

Stock Market performance vs. Robinhood Interest 2018-2020

The combined actions of RH trader’s willingness to buy into selling served them and the overall market well. The top plot shows the total Robinhood investment account size (blue/red) charted against the incidence of the word “Covid” on Google Trends (green). It clearly shows RH investing accelerated at the beginning of the crisis in the U.S. The bottom plot shows the change in Robinhood holdings (black) against the changes in the value of the S&P 500. The drop in the overall market was met with growth in total RH portfolio value. RH investors did not panic or experience margin calls. Instead, there is evidence that as the stock market declined, they actively added cash to fund purchases of more stocks.

CNBC June 12, 2020

Method of Comparison

After downloading stock data from Robintrack, which aggregated RH trades across all account owners, Professor Welch found that while it’s true that Robinhood investors have been attracted to “some rather odd stocks,” these shares are not Robinhood users’ largest holdings. Instead, the average Robinhood portfolio “was a lot more ordinary.” He then applied the Fama and French model to create a benchmark to measure performance against. Walsh broke down the significantly different styles within the holdings to capture size and value. He used their calculated weights and applied the weighting to a merged Value and S&P 500 portfolio. This is not a perfect measure but creates a reasonable benchmark of the full RH portfolio.

This is where naysayers may have to watch who they sneer at. The Robinhood portfolio, based on the collective wisdom of their cohorts, did not underperform. The alphas were positive, and despite the very short sample period, it is viewed as statistically significant at a respectable +1.3% per month.

What Is the Fama and French Three Factor Model?
The Fama and French Three-Factor Model (or the Fama French Model for short) is an asset pricing model developed in 1992 that expands on the capital asset pricing model (CAPM) by adding size risk and value risk factors to the market risk factor in CAPM. This model considers the fact that value and small-cap stocks outperform markets on a regular basis. By including these two additional factors, the model adjusts for this outperforming tendency, which is thought to make it a better tool for evaluating manager performance.
Investopedia

CNBC, June 15, 2020

What Robinhood Traders are Doing

It is not uncommon for veterans in any discipline to poke fun at newcomers that do things differently. This usually changes if the new way is more successful than the more accepted old way. When it comes to people’s money, this is doubly true. There are 13 million primarily young or new Robinhood self-directed investors. They have been stereotyped as unsophisticated followers who have yet to move out of their parent’s house and are throwing away their COVID-19 stimulus check in the markets. There may be some among the 13 million who fit this description. However, data supports the idea that as a whole, the performance of this group is quite admirable and should not be scorned.

On average, those pulling the trigger on trades through the Robinhood app performed well; they earned positive alpha versus cash, the overall market, and even the weighted Fama-French factor model. This simple two-variable model served as the proxy for the investment performance of small retail investors throughout the app trading universe. It will be interesting to see if the model vs. actual experience holds this level of performance over time. One variable during the measurement period with hard to assess influence is the timing of government stimulus checks, this may have impacted investible assets while the market was at a low for the year. Another variable is individuals out of work or working remotely during this period, they may have had more opportunity than normal to research and study some of the high potential names found in the 5% of their portfolio. Anecdotally, as a resource, Channelchek experienced a threefold increase in activity during 2020. A full 25% of that activity is from visitors 25-34 years-of-age accessing company research, articles, and other helpful content. More time to explore and solid resources once reserved for large institutions may also be a contributor to performance results.

Paul Hoffman

Managing Editor, Channelchek

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Sources:

“Retail Raw: Wisdom of the Robinhood Crowd and the Covid Crisis”

Robinhood Traders Nailed the Market Bottom

Kramer Thinks Wall St Pros May Be Playing a Game With Amateur Robinhood Traders

Robinhood Risky Trading

Bloomberg Intelligence

*Robintrack, a website that provided updates on retail stock demand using Robinhood’s public application programming interface, was forced to shut in early August after the data feed was cut.

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Investing, Gambling, and Trading (Which are you Doing?)

September 22, 2020 by Paul Hoffman / Managing Editor 1 Comment

“Oh, that’s gambling,” my mom said. We were talking about an investment I recommended to her two months earlier. She had followed my recommendation to purchase the security, which closely follows gold prices. It went up. In fact, I checked it while on the call and saw it was up 13.7%. The last time I had a conversation with my mom, it was even higher at 19.2%. Gold then retraced a bit after its strong run. For those that pay attention to these markets, the recent dip was not unexpected. I was happy with the position, mom was confused. “Why didn’t you have me sell it,” she asked?”

I had recommended the security purchase as an investment, not as a trade. The added diversity it brought to my parent’s portfolio, and perceived downside risk was why I suggested it. Those elements hadn’t changed. It still represents a good position relative to all the factors that went into this decision for them. Additionally, in my mind, there is no asset with a more compelling story that I’d replace it with right now, including cash. Especially considering the joint account owners are both in their eighties. As an investment, there is always a risk of loss, but it is not a gamble in the way rolling dice is. I should mention that the position wasn’t put on as a trading play. There have been and will be future transactions (trades) involved, but we weren’t trading this stock, they are invested in it. After all, these are retirement assets.

Today, many people use the terms investing and trading interchangeably. They’re both different activities and gambling is completely separate from each of them. There is a bit of overlap. All three seek to increase wealth. Two try to increase wealth by price movement, these two are investing and trading, they are not the same and require different skills and knowledge.

Investing

Accumulated capital that has been allocated to assets with the intent of growth and producing profit is financial investing. The return on investment is generally expected to come from income or price appreciation. The expectation of a return over time in excess of the initial outlay is key to investments. At times this return will be positive; if the investment goes as expected, the return can, of course, also be negative. Seldom will it be unchanged.

There is risk with investing. This risk is commonly linked with potential rewards and is measured against a time horizon. Using real estate as an example, before purchasing an investment property, the investor may try to determine what the risk is that the property sits unrented, what is the risk of the value declining, what are the risks that cost of ownership increases beyond expected rental income, etc.. Investments in stocks, bonds, and funds have their own sets of risks. The primary investment risk is, “what if the investment is worth less than the cost at the time when I anticipate using the money for non-investment purposes.” Within that risk are all the nuances driving the market up and down, the impact of all the elements affecting the sector, and the time you will hold the investment. There is also the consideration of the universe of other options and which would create the best risk-adjusted return over the expected holding period.

Maximizing return at the end of the holding period should be the primary goal of investors. If they find themselves in the position, as many gold investors just did, where the asset jumps 10-20%, it then deserves to be reevaluated with the question, “Is there now a better place for this capital?” This is the same for investments that are not performing or underperforming. Part of investing is looking at nonperforming and holdings that are underwater and asking if it is still the best place for the capital. Seeking return by evaluating holdings, understanding alternatives to each holding, and working to maximize risk-adjusted return is investing.

Trading

More frequent transactions, such as the buying and selling of stocks, commodities, or even flipping houses, fall under the category of trading. The trader could be using the same vehicles as the investor to attempt to increase wealth. But the decision to buy has a limit in that they are looking for quick short-term moves in the asset. Traders of stock, commodities, and real estate are looking for these faster price moves with a goal of returns that outperform buy-and-hold investing. The skill includes awareness that the money committed is not an investment; it is instead the most important tool to generate income. The “tool” needs to be protected through risk management. A trader without money is no longer a trader; they are out of business. This is one reason a good trader has a time horizon – a bad trade should never become a long-term investment.

High-frequency traders look to earn incrementally over many trades during the course of the day. They have a plan to manage the winners to exceed the losers in dollars they generate. Low-frequency traders may monitor the market for long periods of time before uncovering a setup they believe fits their description of a high probability trade.

Trading can potentially return much more than investing. Deciding when investments are most likely to move, rather than ride ups and downs, is often from a series of calculated speculations which fit a tested methodology of that trader. The trader, like the investor, has to be aware of changes that increase risk without adequate reward adjustment when comparing one trade over another.

Gambling

Wagering, betting or gambling, means risking money on an event that has an uncertain outcome and relies more on chance than does investing or trading. One big difference from investing is that gambling very often has a known outcome probability, both direction, and magnitude. These are called odds (50/50, 1,000,000/1, etc.). There are no firm odds for investors or traders. There could be a history of performance, but no mathematical outcomes that all participants are subject to.

Investors and traders, like the gambler, may also benefit from luck, but when done right, trading and investment decisions are based on expectations that don’t in any way include chance.

Take-Away

Whether you’re investing, gambling, or trading, it is important to have a plan. The plan should involve money management skills. For the investor, they should seek to move into another position when their holdings no-longer offer the best risk-adjusted return expectation. Traders should execute when the trade needs to be entered or exited. Win or lose, money management is key to a trader’s survival. Without capital, there is no trading, that would put them out of business. This can be said of gambling as well. Professional gamblers are able to continue only as long as they have money in which to play their game of choice. The average person that gambles by purchasing a lottery ticket is spending a few bucks, writing off the entry fee almost immediately as they spend it. They’ve purchased a fantasy that can last until they check their success. A raffle ticket, lottery, or spin of the wheel at a Church picnic is viewed as a donation. There are few who view their own gambling as investing and trading. Alternatively, there are many who transact with brokerage accounts acting on hunches and guesses who are leaving too much to chance. Successful investors and traders are more deliberate, more methodical. Hunches are not part of their evaluation.

As an aside, the account my mom spoke to me about is an investment account. She is going to hold onto her gold position until something else makes more sense to replace it. She is not a trader. However, her gambling luck is top-notch. Last year she won a $50,000 Mercedes in a Church raffle. Perhaps her exclaiming “that’s gambling” was intended as a positive.

Paul Hoffman

Managing Editor, Channelchek

Identity Resolution, Identifying Customers across Multiple Devices & Touchpoints.

September 21, 2020 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

By: Peter Spoleti, Vertex Markets Inc. | September 21, 2020

…Identity resolution helps marketers be sure about who’s on the other end of a browser, mobile app, or location. Accurate identity resolution allows companies to create a true single view of their customers…

Your Clients are using multiple devices.

In the current digital business environment as people move across devices, mobile phones, desktops, connected and TVs throughout the day. Identity resolution has become increasingly important for businesses, helping them to provide a complete view of their clients and prospects. Also, the able to communicate with them in the most engaging, and relevant way possible.

Do you know who your Clients Really Are?

If you don’t know who someone genuinely is how can you expect to help them? An individual’s behavior is expressed across different channels as they represent themselves in different ways, leaving information fragmented, siloed and an incomplete digital footprint across the web.

Now more than ever businesses need to understand someone beyond just their, email, shipping name and address from their order form or profile. In this customer-centric marketing environment you have to understand who that person truly is, including their professional and personal identities to make sure your message impacts them in a meaningful way.

What is Identity Resolution?

Identity resolution is the practice of identifying you customers and or prospects by the devices they use their browser behavior, and the online activities they participate in, then connecting those behaviors to a specific identity in order to create a complete picture of your customer/prospect and where they are on their Buyer’s Journey.

Identity resolution allows you to create a highly personalized user experience with your brand and a higher ROI.

Is Identity Resolution needed?

This relatively simple description contradicts the intricacy of truly coalescing client/prospect activity in the current digital environment.

The number of interactions clients/prospects can have with your business has increase dramatically in the last decade. In a single day it’s possible for one person to be on a number of devices and numerous platforms creating multiple opportunities for interaction with your brand. As I write this article, I’m writing on my laptop with 4 other screens in front of me. Who amongst us hasn’t researched a product on our phone, only to convert that sale later on our desktop, laptop or through Amazon’s Alexa.

How can marketers compose a complete picture of their clients/prospects and deliver the appropriate messaging at the critical time on the right platform? Identity resolution along with customer data management platform technology, provides us a process to create a “segment of one*” (*The segment of one refers to tracking the activity and preferences of a single potential customer, then tailoring products/services or ads for that individual according to their behaviors.) where each specific client/prospect receives their own personalized brand experience based on their characteristics, behavioral triggers, and where they are in the sales funnel.

Why is identity resolution important?

If you are a customer-centric marketer, identity resolution is an indispensable tool to provide the seamless and valuable client/prospect engagement you are wanting to achieve.

The level of insight opens many opportunities. The current digital environment has grown in complexity, the average household has eleven connected devices, while using multiple platforms, Google reports that 90% of web users move between devices to complete a task. Salesforce reports that “76% of consumers expect brands to understand them and their needs,” yet 51% of them say “most companies fall short of their expectations for great experiences”, Source: Salesforce State of the Connected Customer, Second Edition.

If you’re looking to traverse this intricate digital terrain and connect the dots between an individual using multiple devices to complete a transaction, you’ll need to rely on identity resolution.

Identity resolution helps you understand and analyze unknown website visitors. Anonymous visitors account for as many as 98% of all website visitors, they could be prospects who haven’t converted yet. Or maybe they’ve converted but aren’t log in on arrival. By ignoring the data generated by these visitors means leaving a great amount of data on the table, reducing your marketing ROI. By using identity resolution, you can reunite anonymous visitor data with your known visitor data creating a better understandings into client/prospect behavior potentially increasing ROI.
It establishes a consistent customer experience. As mentioned earlier, clients/prospects aren’t using just a single device to communicate with you. They’re using multiple devices across multiple platforms. Identity resolution helps you to ensure your clients/prospects have a consistent relevant, quality experience no matter which of their devices they are using to reach you.
It increases your marketing ROI. It’s been reported that over 20% of every marketing dollar spent on advertising is wasted due to poor data quality. Attributable to, most marketers are forced to work with a limited view of their client/prospect based on breadcrumbs collected from inconsistent interactions. It’s like trying to put together a puzzle with less than half the pieces. Resulting in untargeted, poor performing advertising reducing your marketing ROI.

Identity Resolution Challenges?

As many businesses are moving towards customer-centric marketing plus the enormous number of individuals searching online for products and services. Businesses are encountering many obstacles creating a consistent and complete profile of their clients/prospects:

Incomplete data on their clients/prospects, behavior and preferences, from all the devices they’re using to communicate them, and the platform they’re using for that conversation.
Marketing campaigns designed around ill-informed suppositions instead of facts derived from a complete profile built with all relevant information.
Engaging prospects with a one size fits all marketing campaigns due to lake of reliable data identifying specific customer preferences and their location in the sales funnel.

Identity Resolution Software Solutions.

Is your client/prospect data complete, are you using it to develop a holistic profile of them? Are you offering them a relevant, consistent marketing experience. Or are you working with a patchy ineffective client/prospect profile. And, using generic unengaging marketing campaigns, unaware of where your prospects are in your sales funnel.

Identity resolution software is designed to provide you a comprehensive image of your individual clients/prospects by:

Combining data from all devices and sources into a central platform to create one specific clients/prospects profile, providing your marketing department with solid relevant data.
Developing a complete profile of each specific client/prospect with current data from multiple devices, changing behavior, channels, platforms, and addresses.
Developing an identity graph including 3^rd party data, including, other device identities such as email, usernames, phone numbers, IP address, and cookies.
Incorporating into other martech systems initiating marketing campaigns.
Keeping compliant with government regulations.

Identity Resolution, taking your Marketing to the next level.

Implementing identity resolution into your marketing methodology can improve your marketing by linking a countless number of data points and information across all devices and platforms where clients/prospects are communicating with your business. Some of the advantage’s identity resolution can bring to your marketing department are:

Increased Marketing ROI: By combining communications from all devices and platforms, reducing waste and duplication, irrelevant campaigns, and reducing cost of client acquisition and retention.
Higher campaign results: Thanks to a holistic data driven campaign results are improving. Due to knowing the whys and why nots of your KPI’s, and which devices and or platforms produced those results, business can use that information to fine tune their campaigns.
Better segmenting: Businesses are able to drive conversation, retention, loyalty and growth at the macro and micro levels by using detailed data points, allows for improved segmenting and targeting.

As the marketing industry transitions into a cookie-less future with higher levels of data privacy. Identity resolution will provide three areas of interests, quality, transparency, and flexibility. Businesses should use these standards to evaluate their clients/prospects while creating their identity solutions.

Quality: Data quality should be priority one when bringing data points together, but too often businesses tend to favor scale over quality, often leading to subpar results. The strategic linking of multiple signals isn’t always conducted with the precision resulting in a quality identity resolution platform, or effective action. Today, businesses need to make sure their decisions are based on solid data points.

Flexibility: A data platform should be flexible in terms of how technology is implemented for the individual business. Making sure to meet the needs of the business, especially those in move heavily regulated industries, i.e. telecommunications, and financial services. Also, adaptability is essential to success due to the ever changing regulator environment.

Transparency: Identity resolution has also been caught up in the complications surrounding the current environment of data collection

As well as its uses; First, the origin of the data is important, and its collection needs to be wholly compliant with relevant regulation. Second, any subsequent activity should have consent traceability as well as transparency on the nature of the data manipulation and utilization. Third, there is certainly a role for truthful sculpting and artificial intelligence in identity resolution.

As the economy begins to return to normal, businesses will need to be diligent with their marketing budgets, concentrate on and demand an ROI for the new technology they implement. By using this down time to redesign and install the right technology that will provide the opportunity to increase potential rewards when businesses are allowed to get back to normal.

Data Laws.

Privacy regulation has been front and center in recent years. There have been a number of laws and regulations passed governing the use of personal data such as California Consumer Privacy Act (CCPA), Europe’s General Data Protection Regulation (GDPR). These laws and regulations are a strong encouragement for marketers to invest in first-party data in order to work with a user’s consent.

Esports Betting is on a 4,000% Winning Streak

September 21, 2020 by Paul Hoffman / Managing Editor Leave a Comment

There’s a habit I picked up working on a Wall Street trading desk years ago. I don’t admit this to my friends that are not active in the markets; they wouldn’t understand. But, I think Channelchek users will be able to relate to it. Perhaps you do this yourself: When global news unfolds, my initial reaction is not, “oh my God, that’s horrible,” or even “hey, that’s fantastic.” My first mental response, usually unspoken, asks, “Is this bullish or bearish? Who wins, who loses? How will it impact different business sectors?” I haven’t worked on a large trading desk for a number of years, but this habit is still ingrained in me — Hurricane. “Who sells lumber?” War in the Mideast. “Will there be an oil disruption?” Lehman goes bust? …well, you get the point.

When the initial talk of the novel coronavirus, social distancing, lockdowns, and working remotely started to become a reality, this instinct was in high alert. Back in March, when Disney decided to close their theme parks, I was speaking with the Noble Capital Markets trading desk and others in the market whom I trust. We were sure who this would be the worst for. Any company related to travel and hospitality was expected to see severe weakness. After this weakness, we saw an eventual opportunity. The conversations then led to discussions determining what public companies this would quickly benefit. We were spot-on thinking credit card companies, tech and communication services, and of course, some pharmacy and biotech names. However, what was never on my radar, yet in hindsight, makes so much sense, is esports and, more precisely, betting on esports (electronic sports).

Sports Betting

In 2018 the Supreme Court ruled that a federal ban on sports betting was unconstitutional. Since then, the market in the United States for sports betting has grown dramatically. Seventeen states, in addition to Nevada, have now legalized sports betting in various forms. With the growth in this offshoot of two industries (professional sports and gambling) investments in esports and have taken a steep upward trajectory.

Esports Meets Pandemic

As entertainment from more traditional professional sports became unavailable with the suspension and cancellation of regular season play earlier this year, some athletes and spectators pivoted and joined the ranks of the already growing population of esports athletes and audience members. As esports became a higher percentage of the few professional sports competitions being broadcasted with any consistency, esports competitions filled the void for those that enjoy the thrill of human competition. Making it even more inviting is that many casinos closed with concerns over COVID-19. The potential for many sportsbook operators to grab an increased share of esports gambling from these online sports grew and is still growing.

How Much Growth

Forecasts for the industry suggest that even as traditional sports return (both in-person and on our flat screens), the growth in esports and wagering on it will remain on a strong path upward. According to one report that reviewed betting data across ten bookmakers in the months of March and April of this year, esports betting was shown to have grown by 4,000%. Much of this explosion was captured by two major esports titles, FIFA and NBA2K, but others experienced even higher growth from their lower base. The study also brought to light those involved. Half of the core betting audience of esports is represented by high income, full-time professionals between ages 26 and 35. This demographic grew up playing computer and console games. Their interest isn’t unlike someone thirty-years older naturally betting on a boxing match or a bowl game.

The opportunity for long-term growth in the industry is high as gamblers become more aware of esports and its offerings. Additionally, betting opportunities are more plentiful in esports because, for example, a single FIFA match takes 8 to 15 minutes while a football game lasts hours. Additionally, esports is not seasonal — competitions occur year-round with no off-peak periods.

Who Wins in the End

Had I known in March when travel came to a screeching halt, professional sports were halted, and the Las Vegas strip hung “Closed” signs on their doors, what I know now, would I have included esports in my conversations as presumed winners in a pandemic world? That’s hindsight. The best investors look forward. I have been discussing this now with people involved in the markets. It is now on my list of growth industries. The reason is simple, despite its explosive growth from obscurity, the potential for an even greater number of people involved as both players and those wagering is a large multiple from its current state. I certainly wouldn’t bet against it.

Paul Hoffman

Managing Editor, Channelchek