Opinion needed on a crazy idea

[jnsaver]

Disclamer: I'm not advocating that anyone actually do this. I just want evaluations. In fact, I'm blatantly telling you this is a crazy idea and that you'd have to be a moron if you try some crazy stunt someone posts on the internet. I take no responsibility for your lack of judgement.

Have you ever heard of an HYIP or a Ponzi Scheme? Basically you give someone $5 or more for 5 days or more. They take that money and do something highly 'profitable' with it, usually in overseas currency. Then they pay you somethign outrageous like 5% a day on your money. At the end of your term you get the money plus the interest back. However, it usually doesn't work that way. They usually pay you the 5% for a little while, and then take your money and run.

Here's my idea: the responsible poker HYIP. You buy a three month $200 CD. Then you get 40 people to give you $5 for a minimum of three months. You take that $200 and play online poker with it for three months. If after 3 months you come out ahead on the poker table, you take 50% of everything over $200 and split the other half of your winnings plus the original $200 among your 40 investors or if after 3 months you are behind (or if this option is more desirable), you split the CD among your 40 investors. Do you think this is practical or ethical?

If you are a good poker player the chances of very high returns are likely. For example, if you make $100 in 3 months, you've made (50/40) $1.25 for each of your 40 investors or a ($1.25/$5) 25% profit. If you only make $50, you're giving your investors a 12.5% profit on their $5. The results don't equal that of a CD until you make less than $16, assuming you can get a 3 month CD at 4%. If the best you can do is 3%, things don't sour until you make less than $12.

What would be the benefits to you? Free poker, 50% of any winnings you generate if you make more than $12-16. The costs: if you over estimate your poker skills, you absorb the cost, you are the one who has to pay taxes on the cd, you have to keep it small scale to keep it responsible because there's no way you can fork out thousands to buy the initial CD. Because it is gambling, you'd have to keep it at a level where you can only promise your investors growth, not the ability to make them rich or poor.

[jnsaver]

Wait . . . according to bankrate, it looks like the minimum deposit for a three month CD is $500. ING has a 6 month CD with no minimum at 4.1%. So I guess you'd have to put the money in 3 months before you start your hyip. Also, my figures need to take into account interest that compounds monthly. If I'm doing the calculation correctly, the six month cd should make $4.14. Since you had to put the money in 3 months ahead of time, roughly half of the $4.14 should be yours. (This is a good thing, it takes care of the tax issue on the CD. If you come out ahead at poker, you use half of your winnings to pay the taxes on everything you won at the table.) If your 40 investors put in $5 a peice, they all make $.05 at the end of the investment period or 4.1% on the CD option. Using this new method, the poker option has to make more than $4.14 to come out ahead. That's not hard to do for even a safe mediorce player who knows when to walk away from the table.

Another issue, if your poker site offers a bonus . . . would it be ethical for the poker player to keep the bonus or should at least a portion of the bonus be split among investors?

[jnsaver]

Another Disclamer: By investors, I don't mean people who are saving for their retirement, I mean people you know who would normally pay you $5 to watch you eat a bug or drink a gallon of milk in an hour.

Also instead of 40 people, you see forty as being a number of shares availible in your hyip. People could buy more than one share, but you'd have to put a ceiling on how many shares to keep it ethical and on the same par with paying someone $5 to eat a bug.

[terry1156]

First off, a Potzi scheme is where they take in money from some people and pay that money our to other people - it's a variation on a pyramid scheme, but eventually colapses just the same. They say they are "investing" it, but not.

Why recruit others? If you're a good poker player, take 100% of the profits. The only reason to do this would be to scam people...if you lost in poker then you wouldn't pay the people that invested. If you're going to pay them their investment back no matter what, then just do it yourself and reap all the rewards.

[jnsaver]

Ok . . . well maybe it's more of an HYIP. But the two seem to grouped together quite often, so I figured it was the samething.

Why do it? Because if you are a good poker player, this will allow you to play for free. You'll also be making a profit without puting any of your own money in, especially if there's a bonus. Plus, if you've eaten bugs in the past for money, this might just be more fun and less gross.

[terry1156]

Originally Posted by jnsaver

you'd have to keep it at a level where you can only promise your investors growth, not the ability to make them rich or poor.

Originally Posted by jnsaver

You'll also be making a profit without puting any of your own money in

Maybe I don't understand what you're saying. If you promise growth (no risk of them losing their money), then you aren't playing with their money, but you also say there is no risk of using your own money. That doesn't make sense.

[jnsaver]

'Scam' might be a harsh word when you're talking about $5. Besides, even if you lost your money, how is this any different from sponsoring someone for $5 to run in a marathon, especially if the money is privately owned and the money only goes to pay the marathon manager's salary? Expectations are a little different, but all other things are equal.

[jnsaver]

Originally Posted by terry1156

Maybe I don't understand what you're saying. If you promise growth (no risk of them losing their money), then you aren't playing with their money, but you also say there is no risk of using your own money.

Okay. You have to make $4.15 at the table to give them a better return on their money than the CD at ING. That's about 1-3 good hands at $20 table over 3 months. Let's say that you get those 1-3 hands and you come up with $4.15 exactly. What do you get:

All of the interest on the CD.
The poker account bonus money.
Half of the poker winnings.
You played free poker for three months.

Let's say you made zilch (stayed at $200). What do you get?

Half of the interest on the CD.
The poker account bonus money.
You played free poker for three months.

Let's say you lost everything. What do you get?

Half of the interest on the CD.
The poker account bonus money.
Friends who think you have guts.
But you're out an earth shattering $200. Not a big deal unless it was part of your emergency fund. But let's say it was part of your recreation fund.

Let's say you recruit no one and just played poker. What do you get?

The poker account bonus money.
All of your winnings or loosings.

If you loose everything when you go at it on your own, you're out a $2.07 cushion from the CD. If you win big on your own, you keep 100% rather than 50% of the profits, but your friends think that you're some lame dork for playing online games 24/7.

Plus, if you play with someone else's money, it might be a reason not to get really drunk before you log on or play at 3am. You might play more conservatively. If you are a poker player, that's a good thing.

[terry1156]

lol...this makes no sense to me from a financial sense (maybe if you want to impress your friends)

The reason to borrow money in this case would be to limit your risk, but you say if you lose the $200, you're out $200 (and the investors nothing). There is no risk to the investors which makes no sense for a high risk venture.

If you're going to be out $200 if lose, why would you be willing to pay investors 50% of your winnings? maybe if you had no money, but you said the money is recreational money already.

I'd take you up on your those terms any day...absolutely no risk on my part. You'd be crazy to give them (but then if someone offered me those terms, I would assume it was a scam because they make no financial sense).

[34saving]

Okay, it doesn't really make financial sense, but it really shouldn't hurt anybody either . . .However, have you factored in the cost of advertising and distributing the money back to your 40 "investors"? A 37 cent stamp is pretty expensive on a $5 check and that assumes your checks are free . . . I guess paypal could work if they ALL had PERSONAL accounts . . .

[brandondrury]

I'd pay $5 to watch you drink a gallon of milk. I wouldn't pay $5 so you can play poker.

Brandon