FutureSports, the Chicago-based firm that’s enabling institutional traders to bet on future team performance, has landed a deal with MLB.
FutureSports will release team-specific indices that are priced using on-field data points, like wins or runs scored. Index pricing thus fluctuates during games and throughout a season. That price acts as an underlying benchmark for futures contracts that are tradeable through a deal with CME Group, pending regulatory review.
Futures contracts are typically a hedging mechanism, used by farmers to protect against downturns in commodity pricing or airlines to insulate against a rise in fuel costs. FutureSports’ founders, Rhett Dinsdale and Leigh Taylforth, believe their products will provide a hedging vehicle for sports broadcasters, sponsors and even local companies whose businesses could be affected by team performance.
Under the new MLB deal, the league will provide data to FutureSports, which will in turn launch an index for each of the league’s 30 teams. MLB will otherwise have no influence on index pricing, and nobody affiliated with the league, including players, is allowed to trade the related futures contracts. FutureSports previously signed on the NHL, with those indices set to go live with the start of the season next week.