I’ve been pretty excited to see how Nevada upstart fantasy sports operator USFantasy (USF) will do after they launch. Their fantasy sports concept is smartly designed and simple for the casual sports fan to play. The USF fantasy sports game is built on a pari-mutuel system. Most bettors are familiar with pari-mutuel style wagering when they bet on horses at the racetrack. Basically, what USF does with the fantasy sports game is turn “horses” into “quarterbacks”. Instead of betting on thoroughbred horses, bettors make wagers on professional athletes.
The USF system is simple and ingenious because it doesn’t rely on a house to set fixed price odds. The pari-mutuel betting format removes much of the conflicts of interest and insider information plaguing the current fantasy sports betting model offered by industry giants such as DraftKings and Fan Duel. By using a pari-mutuel system, USF can quickly offer a market in any type of contest, from darts, to soccer, to golf. As long as USF can obtain consistent statistics that can be used to rank the outcome, their fantasy sports betting system can be greatly expanded.
There are certain downsides to using the USF pari-mutuel system for fantasy sports. For gamblers familiar with fixed price odds, the pari-mutel system can be frustrating. The odds for any particular wager will move up and down depending on the amount bet on each player. So the odds that are listed when a gambler makes his wagers might not be the odds that he gets when the wager is settled or when the market closes. But the more liquidity a pari-mutuel pool has, the more accurate and stable the odds will be. I think having a statewide or global pari-mutuel pool will make the odds a lot more stable than the pari-mutuel odds gamblers sometimes encounter at a local dog track or single casino.
Let me now describe in more detail how I suspect the USF fantasy sports game works and let’s use NFL as the example. Consider that each fantasy sports bettor has to choose three athletes to play the basic USF game. The bettor must choose a quarterback, a running back, and a receiver. There are three stats that will be used, a single stat for each position, and these stats will be used to determine the winner for each position (passing yards, rushing yards, and receiving yards). Each position makes up its own betting pool. There is a quarterback pool, a running back pool, and a receiver pool. The better chooses a quarterback, a running back, and a receiver. The game is played and yards are awarded as points for each player. The payoffs are then determined using a pari-mutuel method for each of the three pools. The bettor’s aggregate payoff is the sum of his winnings from each position pool.
