At Midas Oracle, Eric Zitzewitz asks, “Is sports betting legal if you bundle it with furniture?”
A furniture retailer in Boston offered furniture that would be free to customers purchasing a mattress, dining table, sofa, or bed between March 7 and April 16, if it turned out that the Red Sox won the 2007 World Series. According to the Boston Globe, one customer spent $40,000 during the promotion, and will get it all back if the Red Sox win. A total of 30,000 bets — er, orders — were placed during the promotion.
Zitzewitz’s question led me to wonder whether, for example, If I bought a sofa from a customer who bought it from the store during the promotion, and the Red Sox win, could I claim the payout?
Or how about a purely financial derivative — I buy the payout option from the sofa owner, but not the sofa. (I have plenty of sofas already, thanks.) The option is worth either $0 or the price of the sofa, depending upon whether the Sox win.
Given 30,000 orders and assuming an average order value of $1,200 each, that is $36,000,000 in potential claims. If the claims were tradable, seems like you could have a pretty liquid little prediction market.
Tradesport prediction market prices suggest a 67 percent likelihood that the Sox will win, so a reasonable price for the payout option attached to the $599 sofa pictured would be about $401.