Michael Schwimer knows what most people think of tout services, sellers of sports-gambling picks. And even though he’s getting into the business himself, he agrees with them.

“I will use the harshest language possible: The industry is disgusting, it’s heartbreaking, it’s just awful,” Schwimer said.

Touting is rife with corruption and often outright fraud, with scant oversight (the Al Pacino movie “Two for the Money” portrays a lot of this with typical Hollywood flair). But as sports betting climbs out of the shadows across the U.S., Schwimer is hoping there’s room for touts who do the same.

“We set out to create a system where, everything they’re doing, we do the opposite,” said the former major-league pitcher, whose first business was investing in young minor-league players.

The new venture, called Jambos Picks, is built on a predictive algorithm, much like the ones professional gamblers use to find their edge. To combat the skepticism associated with touts, Schwimer says he’s committing to a level of transparency rarely seen in the industry, and offering bettors their money back if the picks don’t win.

No Estimates
There are no good estimates for the size of the tout industry nationally, but they exist wherever gambling is present, legal or otherwise. You see them advertising in race pamphlets, online and even at baseball games. In recent years, people have begun soliciting payment for picks on Twitter.

”A majority of touts are not legitimate -- they’re really not experts in what they’re doing, but they sell themselves as experts and they use unethical methodologies to try to get people to pay them,” said Anthony Cabot, distinguished fellow in gaming law at the University of Nevada, Las Vegas. “But are some legit? Sure.”

The genesis of Jambos traces back to the 33-year-old Schwimer’s days in baseball. A pitcher with what he calls “below average stuff,” Schwimer carved out a brief MLB career by building a pitch-sequencing algorithm tailored to each specific hitter’s tendencies.

After a 2013 shoulder injury, Schwimer stopped playing baseball and started investing in it, building on the interest that once had him interning at hedge fund PAW Capital Partners. Knowing firsthand the financial struggles of minor-league players, and sitting on an algorithm that he believed could be honed to predict future success, he raised $26 million and launched Big League Advance.

The company gives money to young players in exchange for a percentage of their MLB earnings, if they make it that far. Big League Advance invested that money in 77 players -- including Rookie of the Year candidate Fernando Tatis Jr. -- and according to Schwimer, 38 are already in the big leagues, with a further dozen likely to follow. He won’t see any real return on his investment until those players reach arbitration or free agency, but early results are encouraging.

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