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FINDING THE LEGAL LOOPHOLE
26 year old entrepreneur claims a way to get around US legal constraintsWebpreneur Victor Palmer (26) from College Station, Texas claims he has a business model that enables his Centsports.com website to circumvent US online gambling constraints, and it’s interesting enough to have attracted the reportage of Forbes business magazine.
Forbes summarises his model as: “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.”
In the Palmer concept, the three elements that make online gambling legally risky are avoided – “prize, chance and consideration.” Because Centsports.com users don’t bet their own cash, no “consideration” is involved, and thus it is legal. Palmer quipped to the Forbes reporter: “Congress assumes if you’re dumb enough to give away money, then go for it.”
Each user starts off with 10 cents in his or her account, provided by Centsports. 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 ‘their’ money eight times – they can cash out a minimum of $10 and receive a check in the mail. Losers risk nothing and are immediately restaked with fresh dimes.
Cashing out is not exactly straight forward. Users compete with each other to snag their winnings from a community pot, with big winners having preference. Users can also earn money by referring friends to Centsports.com for an incentive bonus of 5 percent of any winnings their friends make.
Palmer’s main revenues will come not from the gambling action, but from advertisers like Skype, Pizza Hut and the National Basketball Association anxious to connect with Palmer’s claimed 200 000 player base, assembled on a miniscule marketing budget that finances the 10 cent player freebies and some touting on YouTube. Unless Palmer speaks with a forked tongue, that player base has doubled every month so far.
The young entrepreneur has apparently done his homework. He graduated from Lubbock Christian University at age 16 with a BSc in math, went on to win a Masters in physics at Texas Tech University and in 2006 achieved a Ph.D. in computer science from Texas A&M.
Thats the nice out of the box thinking that makes money. I however love the fact the NBA is in on that lol..
Interesting, but I wonder when it started that the US government actually needed to be legally correct before wading in and shutting down an operation.
I fear that all Forbes has done is to bring his operation to the attention of the authorities …
:Cry:Quote:Palmer’s main revenues will come not from the gambling action, but from advertisers like Skype, Pizza Hut and the National Basketball Association anxious to connect with Palmer’s claimed 200 000 player base …That bit made me laugh too .. of course his revenues are not coming from gambling … he’s providing the stake … how can he make a rev-share profit?
:wink-winkBut it IS interesting to see people trying different models to attempt to become legal, PIC club is another variant on the poker front.
Not to worry Paul.
I haven’t read the details but from what I did read I imagine he’s got his bases covered. since its not actually the customer risking anything in order to get something then its not gambling.
what amazes me is that Forbes saw this as being newsworthy. Its a great twist on an old idea but that’s all it is.
I can’t help but wonder if the kid didn’t know somebody at Forbes to get the article run?
There must be thousands of giveaways in the states, perhaps millions. what makes this one special? because its based on picking winners? You can get that at a lot places, they just don’t tell you its costing them ten cents a person to run the contest.
I believe it mentioned that there is some sort of contest in order to cash out, and that those with more wins get better position in the contest.
