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If you want to buy stock that rests on the future of a soccer team—or any other type of sports team—Furman junior Andrew Kaonga soon will have a game available for you.

Although Kaonga , a mathematics and economics major, and his summer research advisor, Dr. Tom Smythe, associate professor of business and accounting at Furman, have not yet named the game, it is based on how both the stock market and gambling work.

The idea for the game has been percolating for a year, Kaonga said.

“It all started in the ninth grade,” the Zambian native said. “My friends and I, we played cards in elementary school, something we were not supposed to do.” In high school, the card games and gambling continued. As he matured and learned more, he compared his small-time betting to both soccer games and the stock market.

Smythe agreed that comparisons exist.

“You have companies. You invest and you get out,” he said. When betting on soccer, people place bets on the game. But “if you lose, you lose everything.”

During the Zambian mandatory gap year before college, Kaonga began considering a college in the United States. He met a U.S. Embassy employee who had attended Furman and recommended the school. He applied to Furman and as part of his application, he presented his idea for a soccer-betting game. A Furman official sent the idea to immigration officials, who said it has a business potential.

The idea rested there until last year when he discovered Fantex, a company that set up an online betting game. The difference is that they used players rather than teams. They used National Football League players, who received money from the betting while the company received a fraction of the bet.

“I was a little bit panicked,” he said of the discovery.

He talked with Furman professors about working on the game as a summer research project.

“It was different, a different form of summer research,” Smythe said. “It was related to a lot of things.”

In addition, Kaonga’s idea was different from other online gambling and fantasy sports games, Smythe said.  In fantasy football, the player creates a team of the players he wants. And most gambling is match by match, game by game. Kaonga’s game instead is based on existing teams and their seasons.

Smythe’s first recommendation was that Kaonga undertake more research to determine if any other programs like his were available. He found some that were similar but none were really the same.

“One of the things that is attractive about this is it’s just like a stock market,” Smythe said. “If a team loses a key player, the likelihood of winning goes down. If a company produces a bad product or loses a CEO, the stock price can go down.”

However, “in pure gambling, you can lose everything,” Kaonga said. “With this game, that’s not possible. Even if you lose all the games, you can lose only up to a maximum amount. If all the games are lost, that would be 50 percent of the investment.”

“We’re setting it up to take the gambling edge off it,” Smythe said, adding that it will be based on a team’s skills” rather than pure luck. Initially, the beginning of season will begin with something similar to an Initial Public Offering, where game owners set an estimated value of the team and investors bid on buying shares, or certificates, of the team.

It also will be set up so “investors” can win or lose on each game, and a secondary market will be developed to allow trading.

One plus for an investor is that he could get all his money back if the team he is investing in should upset a No. 1 team, Kaonga said.

The game is expected be in a testing, or simulation, status by next summer, probably using the five World Cup soccer teams, Smythe said. The investors, using virtual money, will be students in Furman’s business and accounting department. Links will be provided to team sites and other sports sites and information on the teams will be available.

“Generally what matters is getting information about the teams and players,” Kaonga said. “We can pretty much play this game in any league.”

Like buying stocks, players will buy certificates that can be traded with others playing during a certain time window. They will post trade orders just as those buying stocks do. In later simulations, the creators of the game could even introduce short selling, which occurs when an investor thinks the value of a team will drop for some reason.

“We become the match makers. We create a market. We fully expect some people to just buy a team because they know it,” Smythe said.

That also is much like the stock market where some investors buy stocks of companies they do business with or about whom they have heard good things, he said.

During the testing phase, “we’re trying to learn whether or not it really follows market dynamics,” Smythe said.

Kaonga’s short-term goal is to see if the game works and if people remain interested in playing.

“It is a market, but it has characteristics of its own,” he said.

Smythe said he would like to see the game become a business. “The biggest obstacle is if somebody in the market develops something like this.”

That is a possibility, Kaonga said, because his soccer-trading market “directly competes with the gambling sites and the stock market. But if he and Smythe can pull it off, “it could be lucrative.”

Smythe said the game could be used in investment and market classes at Furman and could be based on any sport.

Kaonga, with a goal of becoming an entrepreneur, expects to return to Zambia but could stay in the United States for some years before returning. He anticipates the game could work well in developing countries.

“It makes it interesting in very poor countries,” he said. “Information about sports is what you have a lot of. Companies, not so much. Companies also can lie” while sports team results are out there for all to see.

 

 

Last updated December 4, 2014
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Clinton Colmenares
News & Media Relations Director