Back in early February 2015, I wrote about and started participating in a weight loss challenge at DietBet.com. As the picture above indicates, a group of folks (strangers or friends) agree on a weight loss goal, put money into a community pot, and the winners split the pot (after fees). It’s part gambling for profit, part community support group, and part behavioral modification nudge.
Knowing myself, I definitely hate losing money if I can at all help it. So far, it’s working! The idea that I would lose hundreds of dollars definitely kept me on track during times of weakness and doubt. (In addition to DietBet, I also did a simultaneous bet at similar site HealthyWager to up the total ante.)
Anyhow, since this is a money blog I figured I’d share some details about my financial results so far on DietBet. You pick from a list of open “games” with a goal of either losing 4% of your body weight in 4 weeks, or 10% in 6 months. I chose the 10% goal and joined The Transformer (Feb 5 – Aug 4), mostly because there were over 1,000 participants and I figured there had to be some people that would drop out. I know, it’s selfish, but it’s like poker – all your profits come from the losers! Indeed, DietBet uses the poker rake business model where they take a cut of the pot and thus never have to risk their own money.
Your weight is verified using a smartphone app (or website) that uploads two pictures each month: one with your feet on a digital scale, and another of your entire (lightly-clothed) body on the same scale. You are given a special keyword to ensure that the weigh-in is done during a 48-hour window.
I put up $25 a month for 6 months. I was offered one month free ($25 discount) if I paid $125 upfront, but since this is all about the behavioral component for me, I wanted the monthly charge to show up on my credit card bill. Players who have chosen to place their bets on a monthly basis may drop out at any time and avoid being charged for future, unplayed rounds.
There is one round per month; Rounds 1 to 6. Half of the total money bet is put towards Round 1 through 5. That is $25 x 6 / 2 = $75, split across 5 rounds is $15 per round. The other half is put toward the final weigh-in round. So $75 is bet on Round 6.
Four rounds have been completed so far, and here are my winnings. Here’s the graphic from my profile page that explains things pretty well:
- Round 1 Breakdown: $16.09 (7% ROI on $15 bet)
- Round 2 Breakdown: $26.94 (80% ROI)
- Round 3 Breakdown: $31.36 (109% ROI)
- Round 4 Breakdown: $31.50 (110% ROI)
According to their documentation, the average “win” is 50% to 100% of your contribution. My personal results appear to be in line with these numbers. Based on the recent trend, I am not expecting the the future payouts to get much better than about 110% as these are probably the serious participants that will finish successfully. Additional people may also “catch up” and make that final Round 6 goal.
Dietbet does take a cut of the gross pot before distribution, between 10% to 25%. For my small monthly bet of under $100 a month, they will take a significant 25% cut. While I definitely think they should take a fee for providing this helpful service, I am conflicted as to what should be a “reasonable” fee. Keep in mind that taking 25% of the gross pot means that they usually take over 50% of your net winnings! (You are guaranteed never to lose money if you win, which otherwise technically could happen if enough people win.)
If I were to assume that I reach all my future weight-loss goals and a future 100% pot ROI, at the end of 6 months, I will have put in $150 and won $285.89 gross (135.89 in gross profit). After the 25% fee, I will take in $214.42 for a net profit of $64.42. That’s a projected 43% ROI on my $150 total bet. Hmm, that’s not too shabby. Perhaps I should have bet more money in retrospect. 🙂
But if I am honest, the fact that the last time I was this weight was about 15 years ago in college, THAT makes me happier than even winning a hundred bucks. In that very important aspect, I think DietBet has a great idea going. If I lost 9% of my total body weight, I’d still probably be okay with everything. There is also a supportive community aspect where people both commiserate and cheer each other on (which I did not actively participate in… not my thing).
You can read through all the Transformer rules here and how they discourage cheating and such. I’ll do a more complete final review once my 6 months is up.
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Hey Jonathan,
I did Healthy wage last year and have done several diet bets. I received a 1099 form from Healthy wage. I put up $900 and got an $1800 check for my winnings. The 1099 had $1800 listed when it should have only been $900. I shouldn’t have to pay taxes on my $900 “bet” should I? Not sure who to talk to about this. Any insight would be appreciated. Way to go with the weight loss. I am like you….hate losing money! Good motivation to lose the weight.
Yes that is a very annoying feature of HealthyWage. Any winnings (gross winnings even!) over $600 will be reported as 1099-MISC. I actually adjusted by bet so that my gross winnings would be just under $600 to avoid this poor execution. I asked them about it and they told me that on your tax return to treat it like a gambling jackpot win. Let’s say you won $1,000 on a slot machine but you already lost $1,000 on that machine beforehand. Technically you can deduct losses up to your winnings. So you would have to note on your tax return that only $900 of the winnings should be taxable income due to your “expenses” which were basically just a return of principal. I suppose this may increase IRS audit chances slightly, but I assume you have some documentation about the bet and therefore should be fine even in the event of an audit.
Hope that helps!
great post. I’m interested to know what you’re doing to lose the weight!
Thanks!
Jonathan,
I tried looking around the website for an e-mail address I could contact you at. I’ve disconnected from social media, so leaving this comment I think is the only way I know to reach you.
I just wanted to reach out and extend my humblest thanks for sharing this post. I’m a 28-year old man very interested in finance and retiring early. I learned about your blog from a friend last year and visit it occasionally, maybe once a week.
I hope this can be encouraging to you and your readers – you changed my life for the better with your post above. It was late December 2017 or early January of this year. I guess I’m not certain how I even found the post, since it was posted in 2015. Maybe I stumbled across it while exploring one of the categories, or maybe I found the wrong (but similar) post using the search box.
Regardless, I was the heaviest I’ve ever been. Four years prior, because of my new job and all of its incentives for pursuing a healthy and active lifestyle, I’d been doing pretty well. But, the fad wore off and I realized how easy it was to meet some of my employer’s goals. For example, as a man I earn bonus incentives each year if my BMI is in a healthy range — or if my waist is less than or equal to 40 inches. Many of the rules had these sorts of alternatives that enabled me to fall into a downward spiral.
I knew something had to change, but I’d grown so comfortable in my lack of activity, eating bad food that tasted so good, etc. When I read your post above, I saw an opportunity and took it. I realized that because I’m so financially motivated, I would never allow myself to lose $150 dollars – especially knowing that it was likely to earn a decent amount of interest if I succeeded. The discovery of the post coincided with a step challenge at work. Because of dietbet, i quickly discovered stepbet and runbet as well. These naturally fit very well into my routine in my quest for weight loss.
I don’t want to go on too much longer, so I’ll just wrap it up by saying that it’s now been almost 4 months and that I’ve lost 32 pounds. My BMI is close to finally being in a healthy range. I’ve already met my round 6 “transformer” goal on Dietbet. I just got in my annual health screening results from Quest that my employer requests and they are miraculous. I was able to compare them side-by-side with previous years. I also feel more energized, confident and happy. Thank you from the bottom of my heart for sharing your experience and encouraging your readers to experiment with something that can improve your outlook both financially and physically.
Warmest regards — Kevin