By Christopher P. Rabalais
July 11, 2010

It would probably come as a surprise to most that I am not an avid sports fan. In fact, I am not a sports fan at all. At several points in my life, I put considerable effort, time and money into trying to become a sports fan. It never took. My fascination has always been intensely focused on markets, economics and finance. I want to know how the “machinery” of the global economy functions. In spite of having no formal background in any of these disciplines, I have dedicated the better part of the last 10 years to self-educate. About half of that has been through my experience with building the SRI and the other half through reading and study.

The idea of “investing” in sports was more of a logical conclusion resulting from my exposure to the sports gambling world and asking the question “Why not?”. Most people have direct investments or indirect investments in companies and instruments that they don’t really completely understand. In spite of my personal disinterest, I have tremendous respect for the power of sports in every corner of our world. And I know that most fans know infinitely more about their sports teams than their stock holdings. So why not a “sports stock market”?

Today is the final game of the 2010 World Cup between Netherlands and Spain. I can’t help but stand in awe of the focus and attention this event draws from Los Angeles to Nairobi. How many people are paying attention? A billion?.. more? I don’t know. But, it is a very big number. So, I thought today would be an appropriate day to put forth my most sincere thoughts on why the success of the SportsRiskIndex® is inevitable… not possible… inevitable… It is simply a matter of when.

There are three basic premises that form my conviction:

1. Passionate desire – Sports creates a passionate desire for involvement at all levels and everywhere. It is almost without peer.
2. Practical understanding – A comprehensive, yet easy-to-understand, educational delivery system via online and traditional media will bridge the desire to our product.
3. Pervasive access – With the use of an Internet browser or telephone, access to the marketplace will be available to all. There is hardly any place on Earth without either or both of these. Very quickly, through smart phones, most will have such a device in their pocket.

If there is one thing I’ve learned in dealing with market operators, Regulators, economists and high-level attorneys, it is that you must address all affected parties and their interests if you intend to succeed at spawning a paradigm shift of this magnitude. You must clearly and convincingly answer the question: “What is in this for me?”

So, let’s go through that list:

The Global Public

This is probably the easiest to answer. The appetite for sports and sports-related products is practically universal and almost endless. Additionally, in spite of legal restrictions, an astounding number of people continue to place sports bets with firms in unregulated jurisdictions. With a solid foundation of understanding through comprehensive and accessible education (such as free online colleges hosted by sports stars), it is just a baby step to go from buying a team hat or jersey to a legitimate and legal financial contract that offers the potential for appreciation. All of this without breaking any rules or laws.

National Governments

Quite simply, this is a taxation issue. Since client accounts will be established in much the same fashion as bank or brokerage accounts, all International, Federal, State, County and Local tax consequences are accounted for. You will receive a statement of profit or loss in the same manner as your 401(k) or stock brokerage account. Government is already “plugged in”.

The Sports Industry

There are direct benefits and ones that are harder to exactly quantify… yet they are nearly guaranteed to take place. In our model, each league or franchise will receive a gross royalty on the worldwide trading of contracts tied to their operations. This does not cause any conflicts because these payments are not based on a particular outcome. They are a percentage of the total “flow” of that particular league or team. They intake this as a gross licensing revenue. This has already been legally vetted from the Regulatory and league sides and form direct revenues. Obviously, participation by the leagues will add credibility to the market drawing in more traders. More traders will trade more often creating larger trade volumes. Prices will become more efficient and royalties will rise with the increased trading. It becomes a “self-feeding dog”.

But… there are benefits that extend far beyond these commission payments. Anecdotal evidence has shown that financial participation increases involvement. This means it is highly likely that traders will buy more merchandise, go to more games (business investment expense… maybe?) and pay much more attention to their favorite teams. Further evidence has shown that traders often seek out new types of sports and begin following them. This creates new demand for sports that would have otherwise been isolated from these new followers and fans.

And… it gets bigger than that. In other markets where index futures operate, there tends to be new flows of capital that would not otherwise find their way. Since these instruments provide the ability to manage financial risk, new monies will be “put on the line” that would not otherwise be there. This means new investment in sports that would have otherwise remained underfunded or unfunded. It means expansion financing for growing teams and leagues. And, it can mean completely new opportunities in emerging markets where previously the risk was simply too high to even take a chance. This could mean brand-new economic opportunity in the far corners of the world that don’t have much going for them… but their sports enterprises.

This says nothing of the “cottage” industry that will spring up all over the globe to support this New Sports Economy®. The possibilities are too vast to list. Ask the question: What industry sprung up around the NYSE or NASDAQ? Then ask the question: What happens where there is a legal sports stock market? What products and services will be needed by the hoards of new traders?

Well… the patent pending before the U.S. Patent and Trademark Office for our SportsRiskIndex® ( is the foundation for exactly that. And it isn’t just a patent on the formulation for a particular sport or league. It covers the entire concept of a sports-based financial index and contract trading against it. It is the patent sitting at the foundation of a completely new industry… not just a product.

At present, the futures markets trade a notional value of $5,000,000,000,000+ USD per trading day. No, that is not a typo. That is FIVE TRILLION DOLLARS per day and growing. That is the amount of the total U.S. national debt in a little over 2 trading days. The vast majority of this trading is done by non-consumers and on commodities like gold, silver, cotton, soybeans and pork bellies. What happens when the entire world can click a few keys on their smart phone and buy or sell a contract in the New York Yankees? And what happens when that pork belly trader decides to try his hand on trading some Los Angeles Dodgers contracts?

Stay tuned… we expect to find out.