Unregulated, new gaming site to offer prize money for picking hot stocks

·4 min read
A model wears ape makeup to promote ApeStox, an online gaming platform based on the stock market and cryptocurrencies scheduled to launch in the fall. (ApeStox via Twitter)
A model wears ape makeup to promote ApeStox, an online gaming platform based on the stock market and cryptocurrencies scheduled to launch in the fall. (ApeStox via Twitter)

At the height of meme-stock mania, "apes together strong" was a battle cry for investors loading up on GameStop (GME), Bed Bath & Beyond (BBBY), AMC Entertainment (AMC), and shares of former Canadian technology darling BlackBerry (BB.TO)(BB).

The reference to the Planet of the Apes films, where primates overthrow mankind, was fitting in early 2021. For the newbie traders who coordinated a short-squeeze on the Wall Street funds that bet against these out-of-favour companies, it was about reclaiming the stock market for average people while making a quick buck during COVID-19 lockdowns.

Now, a Canadian gaming industry lawyer is preparing an ape-inspired online gaming platform where players compete by predicting how stocks and cryptocurrencies will trade, risking only an entry fee between $1 and $1,000.

Brian Hall is the co-founder of ApeStox, and an attorney at the Toronto law office of Lazarus Charbonneau. Hoping to capture the bravado of online forums like Reddit's WallStreetBets, he envisions a player leaderboard where pro traders are publicly ranked against self-taught investors. His plans even include a "World Series of Trading" tournament with a $10,000,000 prize.

"There's a lot of chest-pounding in this space," Hall told Yahoo Finance Canada in a video interview from Saint Martin, where the company is partially based. "If we do this right... there's going to be a class of celebrities that are kind of born from this."

ApeStox is scheduled to launch this fall with two modes of play. A simple "higher or lower" version presents securities or crypto coins, asking players if they will trade higher or lower in an allotted time. In the "open markets" version, players are given fake currency to invest, and are ranked on their returns. In both cases, the prize pool is determined by the game's entry fees, of which ApeStox collects a percentage.

"If you hold a 1,000 player tournament with a $1,000 buy-in, that's a million-dollar prize pool," Hall said. "Maybe first place would walk away $500,000."

He sees the privately-owned business as an eventual acquisition target for U.S. casino giants like MGM Resorts (MGM) and Caesars Entertainment (CZR) as they pursue millennial and Gen Z customers, and look to cash in on growing interest in the stock market.

I’m confident if it ever got there, a judge would agree with meBrian Hall, ApeStox co-founder and Canadian gaming industry lawyer

Hall says a key selling feature is the lack of licensing or regulatory obstacles typically required in the gambling industry. Drawing on his legal background, he says ApeStox falls outside the jurisdiction of provincial and state regulators that typically oversee casino, horse racing, and sports betting operators. The distinguishing factor, he explains, is that picking stocks and crypto is a skill.

"The prize is distributed solely on the choices of the player. There's no intervening deck of cards or RNG (random number generator) or any element of chance," Hall said.

A spokesperson for the AGCO (Alcohol and Gaming Commission of Ontario) says ApeStox has not registered with the agency, or been analyzed by its gaming lab. In an email, Raymond Kahnert says the AGCO is "not in a position to comment on the nature of the game, and whether it is a game of chance, a game of skill, or a game of mixed chance and skill."

"I'm confident if it ever got there, a judge would agree with me," said Hall. "AGCO knows very well about this distinction. They've been in court on that very issue a number of times, so I don't worry that they're going to attack us."

ApeStox plans to voluntarily enforce a minimum age of 18 years old on the site. Hall says tournaments will be limited to stocks on major exchanges and larger cryptocurrencies to reduce the risk of players using insider information, or manipulating securities from outside the game.

Noting the success of fantasy sports giants DraftKings (DKNG) and FanDuel in shaping public policy in key U.S. states like New York, Hall says he actually favours a relationship with regulators at some point in time.

In Ontario, however, DraftKings, FanDuel and others recently shut down their paid fantasy sports offerings due to new internet gambling regulations that consider the practice gambling, and require players to be physically located in the province.

AGCO spokesperson Kahnert also notes Ontario's iGaming rules prohibit "bets on assets and financial markets (e.g. stocks, bonds, currencies, real property)."

"I see [regulation] as a way to protect our market share if we get bigger, because it creates an obstacle for competitors to come in," Hall said. "I'd welcome it, especially if we're leading the market."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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