The Black Swan comes to MMA

In case you’re hiding under a rock, you missed an amazing MMA fight last night between Holly Holm and Ronda Rousey—unless you’re one of the Vegas bookies, in which case things didn’t turn out pretty at all, according to news reports.

USA Today is reporting:

Jay Kornegay, vice president of the Westgate Las Vegas Superbook, said Rousey’s stunning loss to Holly Holm on Saturday night exceeded the handle for an average NFL game and topped numbers for any previous Rousey fight. And Rousey wasn’t the only one who lost Saturday night.

“The results around town were not good,’’ Kornegay told USA TODAY Sports, referring to Las Vegas sports books. “Most books got crushed as typical underdog betting was popular.’’

These small bets with potential outsized rewards are like making primary venture capital investments or buying out of the money options. More likely than not, you’re going to lose money, but in the event that you do win, it’s going to be huge.

You just don’t want to be the one on the short side of that trade. It makes me wonder though how these Vegas casinos and sports books hedge their risk; financial firms use metrics like VAR, so I wonder if casinos use something similar.

Congrats again to Holly Holm on the upset.

Keep Hustling,

Alex Cook

PS: Given the recent terrorist attack in Paris, I’m asking you to please consider making a donation to the International Federation of Red Cross and Red Crescent Societies. France has been with us literally since the start of our country during the Revolutionary War. Let’s give our friends across the Atlantic some help.