The ICC World Cup 2011 kicked off with a first-ball boundary - and surely a lot of money must have been won and lost on that outcome. Such is the extent of the betting game that goes along with the one played on the cricket fields. The gambling for a cricket World Cup is nowhere near its football counterpart, but is still huge as nearly one-third of the world population is believed to have keen interest in the event.
Betting in Pakistan is illegal but like many other illegal things, it has a well-established market, which, according to informal sources, has a size of Rs25-30 billion for an event of World Cups stature. Stock market investors are also believed to be one of the most active participants in the gambling game. As a result, volumes and returns at the KSE definitely follow a familiar pattern before, during and after the tournament.
The stock market trading volumes traditionally go down a month prior to the start of a World cup. In a note published in these columns at the start of the Fifa World cup 2010 on June 11, it was noted that the volumes shrank by an average 19 percent on a month-on-month basis during the 30-day period prior to the World Cup.
The current slide of 15 percent in the daily KSE volume is the first tick in the box - and the story may not be any different this time. Going by trends, trading volumes are destined to dip considerably during the tournament, as history suggests an average 28 percent fall in the volumes against the prior months volume.
Another trend that the stock market religiously follows is a slide in average market returns during the 30-day period prior to the World Cup, as people tend to sell conventional portfolio assets and venture into the betting market.
Not even once, has the stock market deviated from this trend in the past seven world cups, cricket and football both. The 4.3 percent dip in the index return in the 30-day period prior to the ICC World Cup 2011 only reconfirms the trend.
What happens after the tournament is over also follows a pattern: i.e. a rebound in index returns after staying range-bound during the journey. This is, of course, not to say, that history will always repeat itself, as there have been exceptions to the rule, though few and far between.
"The sports betting market in Karachi is not a myth, it exists and it is huge. The trading does get dull especially at the knock-out stages....and we all know it happens just across the road where the KSE head office is placed," told a stock broker on condition of anonymity. So going by history, it is not a bad time to buy in the market or bet or both.
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KSE-100 index return
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30 days During 30 days
prior WC after
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FIFA 98 -29.0% -23.9% 26.1%
ICC 99 -15.5% -13.7% 10.1%
FIFA 02 -11.9% 6.6% 0.7%
ICC 03 -10.7% 9.7% 7.6%
FIFA 06 -15.5% -0.1% 10.7%
ICC 07 -0.4% 7.3% 3.5%
FIFA 10 -8.1% 5.3% 4.1%
ICC 11 -4.3% NA NA
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Source: KSE
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