Writers of Pro Football Prospectus 2008

06 Sep 2005

Fantasy Player Protection

This is just kooky: Insurance for your fantasy football team. How much do you have to be spending on fantasy football to actually buy something like this? (Thanks to Lucas Ruprecht at Pro Trade for the link.)

Posted by: Aaron Schatz on 06 Sep 2005

12 comments, Last at 07 Sep 2005, 5:55pm by Catfish


by B (not verified) :: Tue, 09/06/2005 - 11:05am

Hmmmm, $4.95 on Fred Taylor and if he misses at least 6 games, I make $12.50, not bad. Will they still pay out if he's not actually on my fantasy team? Also, where can I get fantasy insurance for my loser league team in case Kyle Orton suddenly turns into a pro-bowl QB?

by Drew (not verified) :: Tue, 09/06/2005 - 12:11pm

This strikes me as a not-too-subtly disguised form of gambling on injuries. Not that there's anything wrong with that.

by RowdyRoddyPiper (not verified) :: Tue, 09/06/2005 - 2:03pm

Yep, it's definitely not insurance. Insurance requires the holder to have a provable loss. I hope that they realize that being classified as insurance rather than gambling is much worse from a paperwork and regulatory standpoint.

by Sophandros (not verified) :: Tue, 09/06/2005 - 4:51pm

Their site states that they are not an insurance company, and they aren't a gambling site.

I don't see how this is legal in any way, shape, or form if what their FAQ says is true (see link).

by Drew (not verified) :: Tue, 09/06/2005 - 5:44pm

The FAQ page might claim it's not a gambling site, but as T.O. might say, "if it walks like a duck, and talks like a duck..."

by Jim A (not verified) :: Tue, 09/06/2005 - 11:14pm

For these guys to be successful, they'd have to have a pretty good idea of the risk/rates of injuries of players by position, age, etc. That alone would be pretty valuable information.

by Tim (not verified) :: Wed, 09/07/2005 - 1:26am

They might make all their profit on a cashflow basis. One guy with an internet connection and PayPal account could run this company, probably while also working another job, so it's not like there's a lot of overhead. They get paid in August or September and don't make any payouts until after the season in January. If there are enough people using this service, they're probably betting on (I mean, buying insurance for) all the players, so the proprietors are hedged against basically any outcome unless almost everyone gets hurt early. Some wise investing of the income could produce enough revenue to pay off whatever policies they have to at the end of the season.

If it really qualifies as a non-gambling venture, I tip my hat to the creativity of the proprietor.

by Jeff F (not verified) :: Wed, 09/07/2005 - 3:27am

Jim A is right. If this guy doesn't have superb data, and, say, a bunch of people from FO were to take huge advantage of this, choosing the players that statistically are much more inclined to get injury, relative to the money payouts, he could become a broke man.

by masocc (not verified) :: Wed, 09/07/2005 - 5:59am

Re #8: More likely, he would become a WANTED man. IIRC, Paypal does not cover a grievance from a purchaser after a set period of time has passed (60 days?).

So we could jump ALL over the Fred Taylor's and the Domanick Davis', but I'd be surprised if we ever saw a penny out of the guy, especially if he wasn't going to be turning a profit. Maybe I'm just a pessimist.

by DC Tom (not verified) :: Wed, 09/07/2005 - 3:24pm

As a matter of first impression, the site is most definitely not legal, as it uses players names and images without an NFLPA license, best I can tell.

That said, if they get enough purchases, they should be able to make it work. The trigger is a "missed game" -- the payout happens even if a player is benchec. A database of position-by-position statistics on missed games would not be terribly hard to construct. The key would be to make sure you inspire enough Brett Favre contracts and not simply Michael Vick or Fred Taylor contracts.

There is also a significant moral hazard issue from this. It will make folks more likely to take injury-risk picks for their Fantasy team. As a result, the best use of this operation for me is to forward the URL to each player in my Fantasy league and encourage them to take out "policies"! ...and then watch the yahoos draft Fred Taylor.

by geoff (not verified) :: Wed, 09/07/2005 - 5:26pm

Actually, the payout structures makes it a virtual certainty that they will make lots of money from this:

3-5 games pays 1:1
missing the season pays 7:1

I'm certain that the actual rates of injury to skill players is much less than that.

Of course, since they take the money in September and then promise to pay in December, there's also the possibility that this is all just a big scam, and no one will get repaid.

by Catfish (not verified) :: Wed, 09/07/2005 - 5:55pm

"We are not an insurance company and we do not claim to be. This service is designed for fantasy team owners to recoop losses due to missed games or events of their fantasy players."

That's funny, I thought a system where you pay a certain amount in advance to protect yourself from larger losses in the future was the definition of insurance.

Especially if masocc is correct about the time limits on PayPal grievances, this has the potential to be a big scam.