This is my latest post in my Free Startup Ideas series.
I've been coming up with business ideas since my earliest childhood memories. Most of them have been absolutely terrible. Some of them have been decent. And now I'm going to give away some of my best ones for free.
Am I really give these ideas away with zero expectation of return? Absolutely.
- Ideas are worthless. It's all about execution. If you want to take one of these ideas and run with it, do it. I'll even be happy to give you a brain dump with all of my notes on the idea as I’ve been thinking about most of them for a while.
- I take coffee meetings all the time with people looking for startup ideas. Perhaps one of these ideas will help them spark a new idea of their own.
- I want to get these ideas out of my head to clear some of my brain's RAM. That way I can come up with new and better ideas.
- I like giving things away and planting seeds.
Without further ado...
Peer to Peer Subscription Betting Service
Elevator Pitch: Each year, approximately $380 billion are wagered illegally on sports betting, and trust me, no one enjoys the process of shady bookies and possible connections to the mafia. We have found a loop-hole in the current sports gambling regulations to allow people to wager money on sporting outcomes in a completely legal and safe manner.
Backstory: An old roommate, let's call him David, who had a bit of a sports gambling problem. He had an illegal, shady bookie who used to take his bets. When David would lose money, he would drive an hour on Monday night every week to pay up. When he won, his bookie would come up with convenient excuses why he couldn't meet him. That's the way it works. Every week, you have a certain line of credit depending on how much your bookie trusts you, and then you have to pay up at the end of every week. Everything is done through shady phone systems or busted websites. None of it is legal.
As an entrepreneur, I look at this process and know it doesn't have to be this way. People place wages on sporting events all the time and it's totally legal -- in Las Vegas. But through government regulation and lobbyists, sports betting has only been legalized for Las Vegas. Everywhere else, illegal. That gives opportunity to shady bookies with ties to mafia and bad people.
Recently, we've seen one major loophole exposed in the US gambling laws with the meteoric rise of companies like FanDuel who has raised $88 million in venture funding for its one day fantasy sports leagues. I think I've got a loophole that avoids having to draft fantasy players and is tied to the outcome of a specific sporting event.
DISCLAIMER: WARNING, WARNING, WARNING!!!!! I have not vetted this idea with proper legal council. I've read through the US gambling laws and think this idea passes the test, BUT it would ultimately come down to a court ruling or letter of understanding which I never obtained. So if you're actually considering something like this, you really need to do your homework, or you might end up in jail for a long time.
The entire gist of the sports gambling laws come down to whether a wager is placed on a game of skill or a game of change OR if you can show that there is no monetary benefit that comes from winning the wager. Proving you are a game of skill is tough. That's what FanDuel has done. I'm going after the opposite side. I think I can build a game that doesn't reward players based on the direct result of their wager and hence, not be considered gambling.
So, how does it work? A member signs up for a weekly subscription service and gets a set number of credits. These credits can then be used to make a wager on a sporting event with another player. Wagers are created via a peer-to-peer system. You decide what the lines are and what they payouts are. If you can find someone to take the other side of the outcome, then the wager becomes verified. Both players are debited the credits, and the winner gets a payout equal to the credits from both players. Sounds a lot like regular sports gambling right? Well, here's the kicker.
Credits are completely worthless. There is no way to trade in credits for dollars. Sorry, it's a game that is played for entertainment purposes. Just like you put some credits in an arcade machine, this works the same way. Once the week is over, all credits are wiped. Game over.
With this credit system, no money is rewarded to a player based on a direct result of a wager. That means it's not gambling and therefore it's not illegal. Now I know what you're saying. Playing a game is fine and fun and all, but if I never have the opportunity to make any money, then it's just stupid. And in that, we are in agreement. But...
As with any sport or competitive activity, there are brands and companies who want to be associated with the best players. They pay money directly to these players in a method known as sponsorship. And so it goes with subscription betting. Sponsors will pay the best players to put banner ads on their profile pages. It's going to require some incredibly complicated algorithms, but I would venture that the weekly sponsorship payouts would be roughly equal to the amount of credits a player has earned as this is the ultimate sign of how marketable this player is.
Loopholes Represent Opportunities
I have no idea how well this would hold up in court (which really is the only reason why I haven't actually built this out yet. We actually scoped out the work and think we could have the system up and running in several weeks), but that doesn't change that fact that it is a triple win. The common bettor wins by not have to deal with shady bookies and illegal procedures. The government wins because it gets to collect tax money on the sponsorship money instead of missing out on the $380 billion of lost taxable wagers. And the mafia loses which is a win.
It's time to build the most interesting subscription service since the mail-order Netflix.