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TheStreet Open House

Get Ready for the Fantasy Sports Futures Market

Stocks in this article: AAPLPDIS

PORTLAND, Ore. (TheStreet) -- It doesn't matter if you play in a year-round fantasy sports league or a daily version: Once you've set the lineups and made your picks, it's a fairly hands-off process.

It gives fans something else to root for, but isn't exactly the most engaging pastime for folks used to monitoring the market and making changes in real time. It's exciting, but in about the most passive way imaginable. The folks behind defunct prediction markets TradeSports and Intrade -- the latter of which drew lots of attention for calling President Barack Obama's election win in 2012 before going offline last year -- are trying to change that by allowing players to engage in fantasy sports in real time for real money by treating the games like a stock market.

This week they revived TradeSports.com -- which had run from 2003 through 2008 as a one-on-one trading game -- and revamped it for the state-heavy, media driven Nate Silver-at-ESPN era of U.S. professional sports.

"The Tradesports.com platform uses the roots of the Intrade technology, and we love that technology. It's been battle tested for 10 years with millions of trades and thousands of users, says Ron Bernstein," Tradesports.com's chief executive and founder. "The big difference is in the way the business model works."

Unlike the original TradeSports.com and Intrade -- the latter of which was shut down last year -- the new TradeSports.com shies away from the company's old prediction/futures market model and has turned itself into an online skills competition. Entry fees are as little as $2 (though you can play for free to hone skills without competing for prizes), and each sporting event becomes a skills competition stacked with numerous stocks. If it's a matchup between the Chicago White Sox and New York Yankees, for example, those stocks come in the form of yes-or-no propositions including if Jose Abreu will continue his home run streak or Masahiro Tanaka will strike out seven batters.

A yes equals 100 and no equals zero, with the trader holding the most stocks by the end of the game winning the contest. The stocks fluctuate as the game goes on, with players keeping tabs on the action through leaderboards that display who's winning, how much they're winning and what their profits and losses look like. Predetermined cash prizes are awarded at the end of each matchup, with the number of players involved determining the size of the prize pool.

TradeSports' examples showed matchups with prizes ranging from $700 to $2,500 with buy-in prices from $15 to $50. Who determines what those stocks are? You do, just by watching sports coverage and clicking stories and stats.

"The stocks will be chosen based on what's hot in media leading up to a certain performance," Bernstein says. "For example, when [New England Patriots quarterback Tom] Brady was on a run to throw a certain number of yards in consecutive games or [Portland TrailBlazers power forward LaMarcus] Aldridge is on a run with 35- or 40-point games. Anything that can be answered with a yes or no question or a definitive result can be made into a stock."

But is it all on the level? Bernstein insists it is, and the big changes in TradeSport back him up. Before shutting down in 2008, TradeSport was based in Ireland and had a format that made it look a whole lot more like betting than a game of chance. That's a huge distinction in the U.S, where rules dividing the two vary by state. Bernstein says he's done his due diligence to comply with state laws and has tailored the new TradeSports directly to the U.S. market -- even setting up headquarters in New York.

The site is in its infancy and much of its potential is still just that. Mobile apps aren't available yet, as Bernstein says he and his team want to spend the first few months working out the kinks. There's potential for in-venue locations or even partnership with sports bar chains such as Buffalo Wild Wings, but Bernstein really wants to get the site back to the fundamentals it and Intrade were founded upon in 1999.

Beneath the cash prizes and trading games is a whole lot of data that could end up being more important than the games themselves. Just as Pandora's Music Genome Project and Amazon's consumer data say a whole lot about the people using those sites, TradeSports' data could turn into meaningful knowledge about not only sports fans, but the sports themselves. Bernstein equated it to Apple stock and the effect of cash, brand value, factories and other elements in determining the stock's value. He also notes how Nate Silver and his FiveThirtyEight blog's data led to essential truths about the electorate and candidates that can be applied to sports fans, players and teams as well.

It goes beyond arbitrary supply and demand and into the real reasons why fans tune in, buy tickets and plan bathroom breaks around at-bats.

"We know that prediction markets provide very important data, whether it be on sports, politics or current events," Bernstein says. "That idea is that everyone has a key to the ingredient but no one has the entire key and that the collective wisdom of the crowd is very important."

-- Written by Jason Notte in Portland, Ore.

>To contact the writer of this article, click here: Jason Notte.

>To follow the writer on Twitter, go to http://twitter.com/notteham.

>To submit a news tip, send an email to: tips@thestreet.com.

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Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

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