The coronavirus pandemic has halted sporting events around the world. Gamblers who cannot bet on professional sport are flocking instead to the US stock market, creating a new class of customer for online brokerages and adding fuel to the market rally.
Brokerages that connect everyday investors to the stock market have seen a surge in account openings, as punters seek thrills in unfamiliar places, writes the Financial Times. This has brought new investors to the market, helping US stocks to partially recover from the pandemic sell-off in March.
For example, Charles Schwab, ETrade and Interactive Brokers — three of the four biggest US online brokerages — each hit record numbers of account sign-ups in either March or April, adding a collective 780,000 new customers. March, the high point, amounted to three times the monthly average of the past two years.
Daniel Goodwin, who oversees a team of paralegals for a law firm in Indiana, would typically bet $100 on a handful of sports games every night. A few weeks into the shutdowns, with matches on hold, he fired up a dormant account with several thousand dollars and began to buy stocks.
“I’m not here for the long run — I just want to throw a thousand bucks at something to see if I can make a few hundred,” said Mr Goodwin. “With sports, if I throw $1,000 at something, I lose the whole thing real quick, but here if things go south you can cut your losses.”
“People are staying at home, there’s no sports on — so people are trading for fun with the backdrop of improving markets,” said Rich Repetto, senior research analyst at Sandler O’Neill in New York.