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.
Cashing out is not exactly straight forward. To ensure he can always pay the electric bill, Palmer puts the breaks on payouts (talk about having a house edge). Users compete with each other to snag their winnings from a community pot; big winners get preference.
Users can also earn money by referring friends to Centsports.com. The incentive: 5% of any winnings their friends rack up.
How does Palmer aim to turn a profit? Hungry advertisers–which thus far include Skype, Pizza Hut and the National Basketball Association–and a meager marketing budget consisting of those 10-cent initial stakes and a few teaser videos on YouTube. (Most of Palmer’s initial investment went to cover a mere $5-a-month lease on a computer server.) So far, so good: Palmer says his registered user base, now at 200,000 strong, is nearly doubling every month.
Palmer’s not your average 26-year-old. He began college at Lubbock Christian University (in Lubbock, Texas) at age 11. He graduated at 16 with a BS in mathematics; soon after began working on a Masters degree in physics at Texas Tech University; and in 2006 bagged a Ph.D. in computer science from Texas A&M University.
That résumé notwithstanding, Palmer is more frat boy than power geek. On the phone, he jokes freely about girls and alcohol. With any luck, he may soon have plenty of reasons to raise a glass.
Raghav Somani
admaru121
I guess Congratulations to Aditya Maru and Nivedana and all the other people on the team working on a similar idea. Their idea, though unknowingly, is a smashing success on the other side of the globe.
Any comments on the feasibility of such an idea in Asia?
This cant be possible. Damn guy used our idea. I think someone leaked our idea! hmmmf.
When was this website started? Before or after our plan? haha.
It’ll be interesting to read this company’s finances. What are the chances that any bank is gonna issue financing to this company simply based on the probability that the site’s users are getting their bets right! Put another way, their gambles are paying them more than the company makes from advertisements. I cant imagine how they estimate those probabilities.
And to think we didn’t qualify for the competition. Just proves that because someone says your idea isn’t good, doesn’t mean it isn’t
Incidentally, did you know that the Fedex idea (a plan by Frederick Smith when he was college student) was initially rejected by his professors?
Hahaha. Nivedana is right. The entire arguement that a good idea makes for a good business is royally screwed up. The fact is, If i did indeed come up with a winning new idea, and it was indeed great, then someone would have already made attempts to make the idea in to a business, and probarbly failed (considering that you thought your idea is NEW). Its only the so called BAD ideas that, that no one cane make money out of, that everyone considers stupid, that makes you look like your stupid, it’s those ideas that make it big. The difference, THE ONLY difference is execution. Thats where the idea is REALLY new. I think i can cite a couple of examples. Well done Dhanu!
its not Dhanu!!!!!!! :@
it’s DANU.
hmph.