Two traders have developed a futures market to appeal to fantasy sports junkies and Wall Street lifers who want to bet on professional athletes.
Founded by longtime options traders Eric Wilkinson and Wesley Harr, Draft Hedge is a mobile app that offers users a cross between fantasy football and financial markets.
The futures pricing is loosely based on fantasy valuations, with players earning points depending on their performance in each game. Users can buy or sell-short athletes at any time, including the off-season.
“Whether it’s an e-gaming event or whether it’s football or soccer, or baseball – as long as there’s a quantifiable value, we can create futures around that,” Wilkinson told CNBC.
“Analysts are doing the same thing,” he said. “They’re going ‘OK: he’s going to score two touchdowns and 150 yards, and I think this is what his scores are going to be,'” he added. “The overall market probably has a better idea as to what that value is.”
Known as “The Wolfman” around the Chicago Board of Trade, Wilkinson has been trading financial futures, commodities, stocks and options on a variety of products for about 25 years. CNBC viewers may recognize him as the trader who stood next to CNBC’s Rick Santelli during many of his lively appearances from the CME floor.
The CNBC regular also commented on the U.S. Supreme Court’s recent decision to strike down a 1992 federal law that effectively banned commercial sports betting in most states. The ruling sets the stage for the gradual legalization of the millions of dollars of illicit wagers on professional sports Americans make each year.
The trader said that he and Harr were initially worried about the game appearing too much like gambling, and then the court decision came out.
“It was a really big deal for us because we were always thinking that we landed in between financial and betting,” he said. “We were originally worried about our lexicon, whether we ever said betting and things of that nature whereas now we can say whatever we want.”