A Legal Alternative to Online Gambling

This is a business that is very similar to an idea proposed during the Ventures Business Plan Competition leading up to the Asian Students’ Ventures Forum. Do read this one for a crazy web based BPlan!

Posted by Raghav Somani

Here’s a business model for you: Give people money and let them place any bet they’d like. If they win, they get to keep the spoils; if they lose, give them more money to play with.

No, we’re not talking about the subprime mortgage business. We’re talking about a new–and perfectly legal–online gambling outfit called Centsports.com, founded by budding Webpreneur Victor Palmer in College Station, Texas.

Online gambling has always been illegal, even though people got away with it for years. In 2006, U.S. federal prosecutors started cracking down on payment processors, making things a little harder, even for off-shore virtual casino operators and their customers.

Palmer skirts this pesky problem by banking his customers. Three elements have to be present to violate most state gambling laws–namely “prize, chance and consideration,” says attorney Chuck Humphrey, a gaming-law specialist and author of the Gambling Law U.S. blog. Because Centsports.com doesn’t allow users to bet their own stash, no “consideration” is involved, and thus all is kosher. Quips Palmer: “Congress assumes if you’re dumb enough to give away money, then go for it.”

Here’s how the site works. Each user starts off with 10 cents in his or her account, provided by Centsports. (You need only register a name and password.) From there, they can bet on any event for which Las Vegas bookmakers set a line.

Once users accumulate $20 in winnings–the equivalent of doubling your money eight times, or striking gold on a 200-to-1 long shot–they can cash out a minimum of $10 and receive an actual check in the mail. (In terms of “consideration,” winnings on that initial 10-cent stake don’t constitute ownership until actually cashed out.) Losers risk nothing–except perhaps a touch of pride–and get immediately restaked with fresh dimes.

At the Bear’s Whim

Ventures’ very own Finance Secretary, Aditya Maru, had a lot to share about Doing Business in Russia leading up to his ‘Business Study Mission to Russia’ later this month. I found this article about Entrepreneurs and Business in Russia and the role of the Government, that will give everyone a heads up on the subject. Feel free to spam Maru on the topic. He’s more than happy to share his experience and knowledge.

Posted by Raghav Somani

Russia’s former president Vladimir Putin has spent the last few years expanding the state’s interest in industries ranging from diamonds to aviation. A new fund for the construction of much needed roads and bridges will be largely funded and overseen by the state. Rosoboronexport, the massive arms-trading entity owned by the government, bought the country’s largest titanium concern and has taken control of a carmaker that has a joint venture with General Motors.

In Russia, entrepreneurs don’t just compete with each other, they have to watch that the government isn’t lurking around the corner, planning to seize the fruits of their hard work. Many large natural-resources companies are partly owned by the government–or at the very least, are vulnerable to the government’s whims. But there is a separate sector, made up of fast-growing consumer products companies, telecoms, pharmaceuticals and others, that operates mostly without government interference.

The danger, though, is that this divided economy could result in stagnation. There is an ever-present fear that the government will arbitrarily choose another sector to sink its teeth into. As the newly minted president, Dmitry Medvedev, takes over from Putin, many in Russia are anxious about which way the economic and political winds are blowing.

This all has its roots not in the gangland crony capitalism of the 1990s, but in the latter years of communism. At the time of the Soviet Union’s collapse in 1991, there were no companies as we understand them, and there was no competition. In the late 1980s, Mikhail Gorbachev introduced glasnost and perestroika to loosen controls on society and commerce. This move resulted in well-connected people (such as those who had been active in communist groups or the Party) forming semi-private companies, many of which were simply auxiliaries of state-owned companies and were used to siphon profits into their owners’ pockets.