5. 💰 The story of World Sports Exchange
For much of the 20th century, sports gambling was a static experience. You bet on a team hours before the game started, and then you waited to find out if you were right.
- That all changed in the mid-1990s when three American options traders moved to Antigua to start World Sports Exchange.
How it worked: "Instead of offering point spreads, World Sports Exchange operated like a commodities market," writes the NY Times' Bruce Schoenfeld.
- Before tipoff, options on the favored Lakers, for example, might cost $60 each, while options on the underdog Knicks might cost $40. At the game's conclusion, the losing team's options would be worthless, while the winning team's options would pay out $100.
"But here was the novelty: You didn't have to wait until the game was over to cash in," writes Schoenfeld. "If the Lakers scored the first eight points, the value of that $60 option might grow to, say, $72. You could sell it and pocket your $12 gain."
- "You might then invest in the Knicks at a discount. Or you might wait for the price to fall and buy another option on the Lakers. … Once you'd started, it was hard to stop until the game ended. It was exhausting. It was also great fun."
The big picture: In 1998, the founders of World Sports Exchange were charged with violating the anti-mafia Wire Act, which outlawed taking bets across state lines (which is precisely what they were doing).
- The company shut down in 2013, but the in-play betting industry it helped birth is alive and well — turning gamblers into traders each day.