Bears, bulls and other stock options

BILL LANKHOF -- Toronto Sun

, Last Updated: 7:18 AM ET

Want to own a piece of the Maple Leafs?

Think the Raptors aren't worth a plugged nickel?

Want to put your money where your ever-lovin' sports heart is then Chris Rabalais believes he can make your world come true.

A former day trader on the NASDAQ stock exchange, Rabalais is president of allsportsmarket.com, which he bills as the world's first, and only, all-sports financial market.

"There's nothing to compare this to; there's nothing like it," Rabalais says, of a venture that in 15 months has gone from start-up to 8,500 active users and a market value of $20 million US.

This isn't about simulated games. It's real money. Real games. Real teams. But do not use the "B"-word.

"It's not betting," Rabalais says, but admits the first thing people assume when they hear about his venture is that "it is some variation of a sports book which it is not."

Traders on his market earn money through dividends (paid out on the shares you own when your team wins) and by buying shares low and selling them high.

So if it's not betting, what is it?

Rabalais, a sports fanatic, says: "The idea of trading in your favourite sports team versus trading IBM is a lot more interesting to people. For one thing, they probably have a lot more information on their favourite sports team than they do on their equities portfolio. We put (the website) up to see how the public would respond and it went kind of nuts."

Rabalais claims allsportsmarket.com has clients in 43 countries. There are currently 1,200 different sports issues, or stocks, listed on the exchange.

Blue Jays shares aren't for sale, you say? They are here.

Tiger Woods may be big but he's not a publicly-traded entity, you say?

He is here. It's the stock market's version of going to Disney World: Anything is possible -- but bring your wallet, your imagination and also know you're walking a fine line with the law.

Shares in NASCAR teams, NFL, NCAA, European soccer teams, golfers and tennis players can be bought and sold "like they trade equities on Wall Street," Rabalais says, "we describe it as a sport derivative ... (each share) derives its price from what the public perceives the performance of any given team will be.

"It's not tied to the company or the team itself like on Wall Street, it's not tied to the balance sheet (but) the values move up and down based on the buying and selling pressures of the traders, just like in a stock market."

For instance, with the Maple Leafs mired in a recent slump, a share sold for $5.69 last week. That's a big drop from the team's initial IPO in August of $11.50.

"But if they beat the Senators we pay out a dividend of ... ahh, let me calculate this ... uhmm, about a penny a share," Rabalais says, laughing. "It isn't a stock we've seen a lot of action on."

The more shares in a team or player that are sold on the market, the bigger the dividend pool becomes. Every time a trade is made, 50% of the commission (from all parties involved in the trade) is put into the dividend pot of the team that was traded.

Example: You purchase 20 shares in Raptors at $7.81. The website takes a 10% commission ($15.62), but half ($7.81) goes back into the Raptors' dividend pot.

Rabalais' goal is "developing a full, globally recognized financial exchange for sports. We are trying to go through the regulatory process of becoming a recognized exchange platform," he says. That may be a tough sell. No matter how he dresses it up, some people will argue that it's just another form of gaming.

Rabalais admits there are detractors. Not one of the major leagues or sports teams have endorsed his enterprise -- unless you count the Costa Rican national soccer team. Pro leagues shun anything that so much as hints of gaming and then there's Rabalais' home address.

"I know, you're going to say, why Costa Rica?" Rabalais says.

He can just hear the eyebrows furling into frowns of suspicion. The copyright rules that protect pro sports teams don't always travel well, particularly across international borders, and Rabalais admits the regulatory environment in Central America is what might be termed "iffy."

He, however, argues: "We've done everything to meet U.S. (regulations). I came down in 1999 to work on computer software and I liked the country. It's beautiful. The weather is great. I've got my family here and it's my home now. We have part of our operations in Europe, a programming division in California, we're working on a new business unit in Toronto," continues Rabalais, who uses a Chicago-based public relations company. "We're not operating out of a telephone booth or basement."

The website makes its money through commissions on every trade made.

Growth in online trading is staggering. With more than 100 sites to buy and sell regular stocks online, some estimates project more than 20 million people are trading online. So, how to be unique?

"The customers we have are fanatical. It's a full-time job for some people" Rabalais says. "I didn't even expect to see that happen. These people are addicts."

But most aren't big spenders. The sites user ratings at Alexa.com vary from the ecstatically happy to complaints about market manipulation, light volume and problems with brokers. Like Nasdaq, the regular stock market or any gaming experience, the level of satisfaction may be in direct proportion to a trader's financial success.

"We're not talking about (traders) throwing crazy amounts of money in. Most of it is risk capital. A lot are testing the water: Are we for real? I understand that," Rabalais says. "It's a 15-month-old business. People are not going to have the level of trust that they have with a company they've known for years. They trade on our system because they're sports junkies and it's more interesting than talking about your stock in IBM."


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