Rules

INTRODUCTION

On BetBacked (BB), users make even-odds bets on whether statements will be deemed fair or misleading, in the unanimous opinion of three randomly selected judges, who are experts.

Statement means a specified excerpt on a webpage, or the overall content on a webpage.

To bet about a statement, a user creates a bet contest identifying the statement by its URL.

The creator also places an initial bet on FAIR or MISLEADING.

Once a contest is created, any other user can then bet on FAIR or MISLEADING.

CONTENTS

STAGES OF A BET CONTEST

BETS AND BET CONTESTS ARE ABOUT STATEMENTS

On BB users bet about whether statements will be deemed Fair or Misleading in the unanimous opinion of three randomly selected judges, who are experts.

A statement is an instance of speech, anything created by people to communicate. It can be text, images, signs, audio, video, and so forth. It can be long or short.

Initially, though, bets on BB are restricted to statements that can be identified by a URL.

STATEMENTS ARE IDENTIFIED BY URLS

In a BB contest, the statement being bet about is identified by the URL where the statement can be found, at the time the bet contest is created.

A statement can be the Overall Content at a URL (that is, at a single webpage).

Or, a statement can be a Specific Statement - an excerpt - at a URL.

STATEMENTS ARE ALSO IDENTIFIED BY SNAPSHOTS

A statement is also identified by a snapshot – a digital copy – of the URL’s page, taken by BB automatically when the bet contest is created.

Snapshot Rule: The bet contest is about the statement recorded in that snapshot.

There can be other bet contests about statements at the same URL, but those bet contests are different – they are all timestamped and snapshotted.

If BB’s software can’t take a clear snapshot, the contest will be void.

BETS HAVE 5 POSSIBLE OUTCOMES

FAIR – the judges unanimously decide that the statement is fair.

MISLEADING – the judges unanimously decide that the statement is misleading.

TOO COSTLY – the judges unanimously decide that the cost of the research necessary to reach a decision exceeds the judging fee.

UNDECIDABLE – the judges unanimously decide that the statement can’t be found fair or misleading.

MIXED DECISION – the judges are not unanimous.

THE OUTCOMES (SIDES) YOU CAN BET ON ARE FAIR AND MISLEADING

While a bet contest has 5 possible outcomes, you can only bet on FAIR or MISLEADING.

BETS ARE EVEN ODDS

All bets on BB are even odds. For every dollar you put up, you can win a dollar, minus your share of the judging fees.

But, your original stake – the amount of money you committed to wager – may be decreased (see the Stake Equalization Rule just below).

You win if all three the judges decide on the side you picked, FAIR or MISLEADING.

If the outcome is TOO COSTLY, UNDECIDABLE, or MIXED DECISION, no bettor wins.

STAKE EQUALIZATION RULE

A bet contest is sealed when there is at least $15,000 staked on FAIR and MISLEADING. Then, the betting stops.

The amount of money that you commit in your wager is called your stake.

If the total amount of money that has been staked by all the bettors on one side is greater than the total amount staked on the other side, then each bettor’s stake on that “larger” side is reduced in equal proportion, to make the total amounts of money staked on both sides equal.

For example, if $40,000 is wagered on FAIR and $20,000 is wagered on MISLEADING, each user who bet on FAIR will have her stake reduced by 50%.

(50% x $40,000 = $20,000, leaving both sides with an equal amount of money.)

The Stake Equalizing Algorithm is below.

When betting stops, the bettors’ credit cards are charged to collect their original or adjusted stakes.

WHY TOTAL STAKES ARE EQUALIZED

The purpose of BB is to encourage users to express their opinions by making bet commitments.

If BB had a wager matching method used in conventional peer-to-peer betting markets, there would be little incentive to make bet commitments when wager amounts on each side are lopsided.

That’s because the earlier set of wagers would be the ones, if any, that are matched up.

Later wagers would be stranded with no chance of matching. A stranded bet has almost no meaning because a bettor has no risk of financial loss and no chance of reward.

The Even Odds Payoff Rule and the Stake Equalization Rule are attempts to give bettors an incentive to make bet offers even when the amont of money wagered on one side of a bet contest far exceeds the amount wagered on the other side.

DECIDING THE OUTCOME

Three judges decide the outcome of a bet.

They must decide unanimously for there to be a winning side of the bet.

The theory behind requiring unanimous decisions is that their decision will be less controversial than a split decision.

For each bet contest, judges are chosen by the staff of BetBacked.com. The judges are chosen for their expertise in the subject of the contest.

JUDGES USE THEIR OWN DEFINITIONS OF FAIR AND MISLEADING

Judges follow their own views about the meaning of fair and misleading. BB provides only this guidance.

JUDGING FEES

All bettors share proportionally in paying the judging fees of $3,000.

$600 goes to BB to defray the cost of finding the judges. $800 goes to each judge.

A bettor’s share is: (Bettor’s Stake)/(Total Stakes Collected from All Bettors).

Judging fees are taken as a percentage of the pot - that is, a percentage of the total money collected from bettors. The larger the pot, the lower the percentage.

STAGE 1: CREATING A BET CONTEST

To create a bet contest, you use the bet creation form to:

Step 1. Identify a statement by:

A) Entering a URL.

If you only enter a URL, the bet is about the overall content.

or

B) Entering a URL and a specific statement on that URL’s page.

If you enter a specific statement on the URL’s page, the bet is about that specific statement.

Step 2. Identify the Author/Speaker of the statement (optional).

Step 3. Choose FAIR or MISLEADING

Step 4. Enter your Stake - the amount of money you’re committing to wager.

Step 5. Commit to paying your share of the $3,000 judging fee.

Important: The money you commit – your stake and your share of the judging fee – is not collected, that is, your credit card is not charged, until $15,000 is committed (in total wagers by all bettors) on both FAIR and MISLEADING.

You can also choose to make your bet anonymously.

Your bet contest and wager are posted, and you wait and see if $15,000 in total is wagered on each side, which seals the contest.

You can withdraw a commitment before the bet contest is sealed.

STAGE 2: PLACING A BET IN AN EXISTING CONTEST

To place a bet in an existing contest, you:

Step 1. Find a bet contest by entering a URL or speaker name in the search box.

Step 2. Choose FAIR or MISLEADING.

Step 3. Enter your Stake - the amount of money you’re committing to wager.

Step 4. Commit to paying your share of the $3,000 judging fee.

Important: The money you commit – your stake and your share of the judging fee – is not collected, that is, your credit card is not charged, until $15,000 is committed (in total wagers by all bettors) on both FAIR and MISLEADING.

You can also choose to make your bet anonymously.

Your bet contest and wager are posted, and you wait and see if $10,000 in total is wagered on each side, which seals the contest.

You can withdraw a commitment before the bet contest is sealed.

STAGE 3: BET CONTEST IS SEALED

If $15,000 is wagered in total on each side of the bet, the bet is Sealed.

No more money can be wagered or withdrawn on either side.

STAGE 4: STAKES ARE ADJUSTED AND CREDIT CARDS ARE CHARGED

After a bet is sealed:

  1. System calculates the amount owed by each bettor to be put into the Bet Contest Pot, according to the Stake Equalization Rule.
  2. Each bettor’s credit card on file is charged to collect their stakes owed.
  3. Bettors whose credit cards are declined are removed from the bet contest and are assessed a penalty point. If a bettor accumulates 6 points, she will have all her bets cancelled until she provides a valid card with a high enough credit limit.

STAGE 5: JUDGES ARE SELECTED (OR NOT)

Credit card charges will be declined in some percentage of cases. If charges do not equal $12,000 or more on both sides, the bet reverts to a pre-sealed state. All the money collected is returned.

If $12,000 or more is collected from bettors on both sides of the bet, three judges are selected by the staff of BB to decide the bet.

The judges, without consulting each other, decide if they think the statement is FAIR, MISLEADING, TOO COSTLY, or UNDECIDABLE.

STAGE 6: JUDGES ENTER THEIR DECISIONS

Once judges are selected, they have 2 weeks to decide the bet.

Their decisions are posted on the bet contest page (each contest has a page where the key statistics for that contest can be found).

STAGE 7: MONEY IS DISTRIBUTED

If the outcome is TOO COSTLY, UNDECIDABLE, or MIXED DECISION, all bettors get their stakes back.

Their shares of the judging fees are not returned.

If the judges decide unanimously for FAIR or MISLEADING, the winning bettors receive 2x their initial or adjusted stakes, while the losing bettors lose their initial or adjusted stakes.

A bettor can withdraw winning from his/her account.

STAKE EQUALIZING ALGORITHM

Note: the algorithm BB uses is longer than the one below, to account for credit card charges that fail. However, for bettors whose charges go through, the algorithm used is equivalent to the one below.

If the Total Staked on Misleading = Total Staked on Fair, give each winning bettor 2x her stake, minus her judging fee share, and give each losing bettor nothing.

If the Total Wagered on one side is greater than the Total Wagered on the other side, adjust the stakes:

  1. Call the Total Staked on the side with more money the Larger Amount (L) and the total on the opposite side the Smaller Amount (S).

    Example:

    $25,000 is staked on Fair – that's the Larger Amount (L)

    $10,000 is staked on Misleading – that's the Smaller Amount (S)

  2. Divide S/L to get the Adjustment Factor (AF). So, AF = S/L.

    Example:

    AF = $10,000/$25,000 = 2/5

  3. Multiply each bettor’s stake on the larger side by AF to get each bettor’s Adjusted Stake.

    Example:

    If a bettor’s stake is $500, multiply by 2/5 to get an Adjusted Stake of $200.

    Now, each side has the same amount of money at stake in total.

    Example:

    $10,000 Remaining on Fair

    $10,000 on Misleading

  4. If the winning side had the Larger Amount of money originally:

    1. Pay each winning bettor her Adjusted Stake multiplied by 2, minus her judging fee share.
    2. Take all the money from the losing side.

    Example:

    If the winning side had the Larger Amount originally, pay the bettor $400: her Adjusted Stake of $200, plus her winnings of $200.

  5. If the winning side had the Smaller Amount originally:

    1. Pay each winning bettor his stake multiplied by 2, minus her judging fee share.
    2. Take all the Adjusted Stakes from the losing bettors.