Betting on college grades: Against the UIGEA?

Is this a "skill game" or is it illegal internet gambling?

Ultrinsic chief executive officer Steven Wolf told the Associated Press news agency this week that his company is taking wagers from students at 36 colleges starting this (August) month. He described his offer as an incentive to study, denying that it constituted online gambling because the wagers are based on skill.

Explaining how the system worked, Wolf said that in a manner similar to Las Vegas sportsbooks, his company sets odds on a student’s ability to achieve different levels - punters pay top dollar for A grades and less for lower grades. Students can also wager on failing through what Wolf describes as "grade insurance".

Giving an example of how Ultrinsic works, Wolf told AP that students register, uploading their schedules and official school records. Ultrinsic then sets odds based on the available knowledge and the difficulty of subjects, and the students decide how much to place as a bet, with a minimum of $25.

He explained that a freshman wagering the minimum that he or she will complete college with a 4.0 GPA could realise $2 000 on graduation if the objective is achieved.

Ultrinsic has been active at the Pennsylvania and New York universities since last year, widening ts offer to 34 other colleges in 2010 after a fresh round of funding from unidentified investors.

The respected gambling law expert, Professor I Nelson Rose, told Associated Press that there are three elements to the definition of gambling: chance, some sort of fee or wager and a prize.

In the case of Ultrinsic, the definition is blurred: "It's not entirely within the control of the (player)," Rose opined, offering the example of a professor of his who gave everyone A's after learning he wouldn't be considered for tenure. Another teacher could be equally capricious in handing out C's. "But it is mostly within their control."

Given the role of skill, Ultrinsic might be legal under both federal and state law, Rose said, suggesting that the laws governing insurance might be applied to students betting on bad results.

University spokesmen declined to comment.

Wolf told the news agency that his company hopes to attract around 100 bettors per college – some 3 600 in total - this year.

"There's definitely a lot of variables, but the biggest variable is how much effort the student wants to put in," the Ultrinsic CEO says.

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