Arbitrage, of Humans
Here's an article from Bloomberg: Former MLB Pitcher Backs Betting Software With $10K Refund.Betting software, of course.
The front man for this product is ex-MLB pitcher Michael Schwimer, and (of course) there's a breathless origin story about a guy just being smarter and more savvy than everyone else, with "analytics" thrown in (also of course) and how this model is the real deal.
Then, there's this:
Schwimer, who is a contributor to ESPN’s gambling show “Daily Wager,” is ready for criticism. He faced it recently with his baseball investing -- Big League Advance was briefly sued by a player who claimed he was deceived -- and he knows that a lot of touts make similar promises about breaking from the industry norms.
That’s why he’s heavily promoting his refund policy. The discounts vary depending on how long you subscribe, but the full 17-week plan, which costs $3,000, carries a $10,000 refund if the picks don’t make money overall.
“We’re actually giving people that are skeptical the opportunity to short,” he said. “If you think, ‘There’s no way they can do this,’ then you’re the No. 1 person that should buy our package. If you’re right, you win $10,000. If you’re wrong, you only lose $3,000.”
Now THAT is some delicious stuff.
I mean, this guy must be 100%, gold-plated legit to do this, right?
And now we hit the moment where Michael Schwimer is indeed revealed as a genius, although not, perhaps, in the way that you were expecting.
Absolutely no one who is a legitimate tout would ever offer a 3X refund if their picks are below 52.5% (the break-even point, including the bet fee) for a season. Even the best system is subject to variability and just plain bad luck. Picking sports games is not entirely unlike playing poker--you can make the right play, every time, and still lose money due to randomness.
This is what he's actually doing: attracting a ton of attention. Lots of money coming in, and if his picks don't work and he's below the threshold for refunds? Just declare bankruptcy!
Zero risk for him, 100% reward.
Like I said, he's a genius. In an evil genius kind of way.
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