The Electric Commentary

Wednesday, September 21, 2005

ProTrade

A while back Football Outsider Aaron Schatz and a few other people helped to start up ProTrade. Today they have a write up in the Washington Times:



In an NFL fantasy competition, points typically are based on yards gained, with bonuses for touchdowns and field goals. At season's end, the jackpot goes to the fantasy team owner with the most points.

Statistics are important in ProTrade, too, but the system tries to provide more context by analyzing the situation in which a play occurs. As an example, a three yard run on fourth-and-2 would be worth more than a three-yard run in a third-and-20 situation.

The system is probably too complicated for at least half the nation's fantasy sports players, but ProTrade "will feed into the fanatical, obsessive types who are constantly looking to suck more entertainment value out of football," said Fantasyguru.com publisher John Hansen, who has been following the fantasy sports craze for 11 years.

Mr. Kerns, 28, created ProTrade with 32-year-old Jeffrey Ma, an MIT graduate with a penchant for numbers and gambling. While still in college, Mr. Ma and his buddies became so proficient at counting cards in blackjack that they carted away millions of dollars from Las Vegas casinos, inspiring the best-selling book "Bringing Down the House." (Mr. Ma is Kevin Lewis in the book).

It's not all stats geeks though:



"It's going to take fans to a whole new level of fantasy," predicted Bill Walsh, the former San Francisco 49ers coach and a member of ProTrade's advisory board.

ProTrade initially will be confined to trading NFL players, but the San Mateo, Calif., company expects to add the NBA and Major League Baseball after working out licensing agreements.

"Our mission is to change the way people think about sports," said Mike Kerns, a ProTrade co-founder and former understudy to venture capitalists and sports agents.

The idea drew its inspiration from the 2003 Michael Lewis best-seller "Moneyball," which dissects the statistical analysis Oakland Athletics General Manager Billy Beane used to obtain players he considered undervalued by the rest of the baseball market.

How does it work?


At the outset, basically for the first half of the NFL season, no actual money will be exchanged in ProTrade's market; each participant will get a virtual stake of 25,000 coins to invest.

But capitalism will fuel the market's activity, with weekly prizes awarded to the portfolios with the best investment returns. Later this year, traders will be allowed to create their own competitive leagues and set their own entry fees, with a $5 minimum per entrant.

ProTrade will hold all the entry fees in escrow and then distribute jackpots, minus a 2 percent to 3 percent commission, to league participants who generate the best investment return. ProTrade hopes to make money from those commissions and advertising on the site.


I think it sounds interesting and I may try to put a league together at some point. If any readers happen to be interested, drop a comment or shoot me an e-mail.

Tip o' the cap to Marginal Revolution.

Let's end with a quote from former San Francisco 49er Brent Jones:


Former San Francisco 49ers tight end Brent Jones, a member of ProTrade's advisory board, believes most players will stay away from the site. "There are a lot of guys out there who aren't going to want to see what they're really worth," he said.



3 Comments:

  • This comment has been removed by a blog administrator.

    By Anonymous Anonymous, at 8:52 AM  

  • This sounds a lot like gambling. How are they going to keep it legal in the US? I'd look myself, but I'm behind a corporate firewall.

    By Blogger Mike, at 10:58 AM  

  • I think they have it set up as a futures market. I'm not an expert on the ins and outs of the differences between a market and straight up gambling, but I do know that you can set up a futures market that looks alot like gambling in the US, like the Iowa Electronic Markets:

    http://www.biz.uiowa.edu/iem/

    I'm even more impressed that it not only appears to be legal, but has former players and coaches on the board. I'm sure they have their ducks in a row or those people wouldn't be involved.

    By Blogger PaulNoonan, at 11:06 AM  

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