Opinion

Felix Salmon

World Cup betting pools: The price of entry

By Felix Salmon
June 9, 2010

SOCCER-WORLD/As the World Cup approaches, I’m sure that Reuters isn’t the only place where betting pools are being filled out. Yahoo has quite a tool for such purposes, although it does require that everybody has a Yahoo account.

The microeconomics question here is the optimum entrance fee. The goal is to have the biggest possible pot with the greatest number of participants — but it seems clear to me that as you increase the fee from $5 to $10 and then to $20, the number of participants will fall even as the total size of the pot will rise. Beyond $20, I suspect you’re likely to see even the total size of the pot falling.

My feeling is that $20 is the optimum entry, and not only because it maximizes the size of the pool. If you set the entry fee at $5 or $10, or heaven forbid at some weird number like $12 or $15, then it becomes harder for people to enter, just because you start running into making-change issues. If you have cash in your wallet, chances are you have a $20 in there. Fives and tens are rarer, and in any case there’s always going to be people handing over a 20 and asking for change.

It would be nice to be able to include everybody who wants to play at say the $5 level: $20 is likely to be too much for someone who doesn’t know or care much about football. But $20, I think, it has to be.

Comments
5 comments so far | RSS Comments RSS

Playing? Please call it what it really is – gambling. While I like to think I prefer not to pass judgment on others’ in-office recreational pursuits, I do know enough about math to know that my prospects of winning do not justify the cost of the bet.

Posted by Curmudgeon | Report as abusive
 

haha… this is just supposed to be fun

Posted by ender | Report as abusive
 

Curmudgeon, the whole point of office pools is that they’re zero-sum, which means that your expectation is to get back what you pay in.

Posted by FelixSalmon | Report as abusive
 

Curmudgeon, shouldn’t you be busy working on your defence against Soc-Gen?

Posted by TinyTim1 | Report as abusive
 

The World Cup is by far and away, in a global sense, the largest event every four years. Small countries in economical and political turmoil rise with their nation’s football team. A World Cup goal can make the heart of a downtrodden country beat again. It’s truly a magical month, and it’s time that America joined the rest of the world in realizing the most beautiful game in the world.

http://tinyurl.com/238c9mc

http://www.creativefeed.net/blog

Posted by MarkBez | Report as abusive
 

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