More monetising side bets

Or why grassroots sportspersons are like horses

Almost exactly five years ago, on the predecessor of this blog, I wrote about “monetising side bets”.

Horse breeding is largely funded by revenues from bets. Every time there is a race, there is heavy betting (this is legal in most countries), and a part of the “rent” that the house collects from these bets is shared with the owners of the horses (in the form of prizes and participation fees). And this revenue stream (from side bets on which horse is better, essentially) completely funds horse rearing.

CDSs were a product invented to help holders of debt to transfer credit risk to other players who could hedge the risk better (by diversifying the risk, owning opposite exposures, etc.). However, over time they got so popular that on several debt instruments, the amount of CDSs outstanding is a large multiple of the total value of the debt itself.

Now it appears that horse racing is not the only “sport” that is funded by betting. This afternoon, I was reading this article in The Signal on Kabaddi leagues in India, and a company called SportVot is solving the data problem in Kabaddi.

The key paragraph is this:

This brings us to the third and most critical part of the SportVot story: its monetisation matrix, which spans streaming and brand partnerships to organising tournaments and shaping players’ careers. A bulk of grassroots monetisation happens through real money gaming (RMG) companies because they solve the inventory problem i.e the tournaments these RMG companies need to engage their users, and nudge them to create teams. But beyond RMG companies, Sportvot has also partnered with large sports retail outlets such as Decathlon. (emphasis added)

Real money gaming is a polite term for betting. While betting is officially illegal in India, “fantasy sport” is not, and that allows people to “place proxy bets” on matches. The government has cracked down, of course, levying punitive taxes on money invested in real money games (and not profits). That said, horse racing is also a significant cash cow for governments, where legal.

Putting it another way, “grassroots sports” are similar to horse racing, getting funded from the proceeds of side bets on the game! The players themselves aren’t glamorous enough to get funded through ads, like their elite counterparts. The watching audience doesn’t want to pay directly as well, and instead the broadcast is cross-subsidised by the side bets.

Taking this analogy further, grassroots sportspersons are like horses.