Website lets college students gamble on grades

He checked like the rest of the overachievers - updating the Web page day after day, scanning his transcript for those dreaded B-pluses tugging his grade-point average in the wrong direction.

By late May, rising Penn junior Nick Migliacci knew for sure: He'd scratched out a 3.2 (out of 4) GPA for the spring semester. So close.

"I mean, I got the grades," Migliacci recalled, sighing, "but lost the bet."

Since last fall, Migliacci has been wagering on his grades through a website called Ultrinsic.com, founded by former Penn student Jeremy Gelbart, 23, and longtime friend Steven Wolf, 27. The site offers two options: "rewards" bets that incentivize classroom success and "grade insurance," allowing students to short-sell their own academic prospects.

To the latter end, as hypercompetitive classmates scoured campus for an academic edge, Migliacci began his semester with a preemptive hedge: that he'd finish with a 3.0 GPA or lower.

"I wasn't wagering enough to motivate me not to do well," Migliacci said. "But at least I'd walk away with some money if I didn't."

Soon, thousands of students nationwide will have access to the same choice. After a soft launch at the University of Pennsylvania and New York University last year, Ultrinsic is expanding to over 30 schools this fall, including Harvard, Princeton, Pennsylvania State University, and the University of Southern California. Now operating from an office in New York, the founders expect enrollment - over 500 through the spring, between Penn and NYU - to jump by about 100 per new school. (The company declined to discuss its financial history or expectations.)

Gelbart, who graduated from Queens College in 2009 after transferring from Penn, and Wolf, also a Queens College alum, conceived the idea on a lazy Sunday afternoon at Penn a few years ago. Wolf, visiting for the weekend, offered to pay Gelbart $100 if he aced his exam the next day. Gelbart won the bet.

"Students like learning, but it's work," said Gelbart, president of Ultrinsic. "People want to see an immediate payoff for that hard work."

Most participants opt for success-based bets, Gelbart said, and not the grade insurance. This model of motivation, he says, compels students to assign proper value to long-term academic goals they may neglect - say, learning the material - by distracting them with short-term payoffs.

"The point of the site is to push yourself," he said.

Gelbart and Wolf set odds on a given wager according to an algorithm they've developed over the past two years. Among the factors: the student's academic history (account-holders must turn over a transcript copy when they sign up); the reputation of the course or courses in question; and how much money the student intends to put up - the more someone bets, the founders reason, the more likely he is to do well.

"It doesn't seem that difficult to beat the lines," said Migliacci, who, despite his GPA overstep in the spring, has made about $300 on the site. "I'm guessing they are just making money on people who bet according to which classes they want to do well in, not what the smart economic bet would be."

Indeed, to some experts, Ultrinsic's economics don't compute. How can the site know students better than they know themselves?

Andrew Postlewaite, a Penn game theory professor, says the company faces the classic insurance problem of asymmetric information.

"If people have a better idea whether they'll do well, they can use that to their advantage," he said.

Others in higher education are wary of the site's attitude towards academia.

"This is not what real education is about," said Barmak Nassirian, associate executive director at the American Association of Registrars and Admissions Officers. "They have come up with a shtick."

Dennis DeTurck, dean of the College of Arts and Sciences at Penn, says the venture reminds him of parents slipping young children a few bucks for bringing home an exemplary report card.

"I guess we like to think our students are a little more mature than that," he said.

For many students, having to surrender private academic records is a deal breaker.

Others worry that the grade insurance option in particular will carry indirect, negative consequences if Ultrinsic spreads to their campuses. "What if a guy on my group project was betting against himself?" asked Caitlin Naylor, a rising senior at St. Joseph's.

Whether Ultrinsic constitutes a "betting" site, though, is a matter of debate.

Representatives from state offices in Pennsylvania and New Jersey had never heard of Ultrinsic; its validity, both said, fell outside their jurisdictions. Federal oversight of online gaming - which is technically illegal - remains spotty, though a bill sponsored by Rep. Barney Frank (D., Mass.) to allow clearer regulations of Internet gambling was recently approved by the House Financial Services Committee.

Gelbart insists the site is more motivator than moneymaker.

"This is not in the same category [because] it's completely in the student's control," Gelbart said. "There are elements of chance, but if you study harder, you'll do well."

Ultrinsic's philosophy, Gelbart added, "is definitely going to be implemented in the future of education."

Those operating in the present of education remain unconvinced.

"By their logic, you should buy a hit on yourself," Nassirian said. "Would that motivate you to do well?"