Play Games for Tuition: For Real?

All those hours students spend playing on Facebook and other social gaming sites might actually be paying off – literally.

A new start-up purports to help students pay for tuition by awarding money to the winners of online games resembling Texas Hold ‘Em and Words With Friends – at no financial cost whatsoever to the student.

The co-founders, recent Ivy League graduates themselves, are certainly sympathetic to the plight of students

The pitch Makhael Naayem and co-founder’s Dimitri Sillam are making to students is simple: You’re going to be playing games online anyway, so why not earn some money toward tuition while doing it?

It might seem improbable, but since the site launched March 25, about 2,000 students have registered and 150 have won tuition grants totaling $20,000. (Here’s testimony from one University of Vermont student who won $2,000.)

A graduate of Columbia University’s engineering entrepreneurship program, Naayem demonstrates the altruistic mentality that some young entrepreneurs have today, said Chris McGarry, a major gifts officer at Columbia who helped connect Naayem to alumni who are “mentoring” the Grantoo co-founders (and who have told McGarry the recent graduates have the chops to be successful).

“Business schools generate ideas around things you can consume,” McGarry said. “Engineering students tend to create problem-solving types of ventures that really create a value, instead of just create money.”

Grantoo hosts daily tournaments with $100 payouts, and ones every Sunday with $2,000 payouts split between 10 or so winners; the bigger the payout, the more winners there are.

But with most of the payouts being relatively small after they’re divided among winners, and with only about 5 percent of registered players having won, is it really worth students investing their time in this?

It depends how much time they're spending on it. Dan Romer, director of the Adolescent Communication Institute at the University of Pennsylvania, has studied gambling habits among college students. He noted that the models are different; students who gamble make financially risky decisions, but all students who play on Grantoo can lose is time. Yet the idea can be informed somewhat by online gambling, to which students can easily “get hooked.”

“If there’s a lot of time involved, that could be a real problem, because students shouldn’t be online doing this. They should be online researching for papers and homework,” Romer said. “Only the ones who are really good at it – which takes a lot of time to develop – are going to make money.”

There have been a lot of repeat winners, Naayem said – probably those who spend lots of time practicing (students can also play in non-tournament settings).

It works like this: Grantoo partners with sponsors looking to market directly to college students. The handful of sponsors they’re working with so far include the music sharing site Grooveshark, the payment website WePay, and the online marketplace Tradepal. When a company sponsors a 45-minute “tournament,” whose winners receive tuition grants, the Grantoo web page is customized to reflect that. (Sort of like Grooveshark does on its own site.)

“What we’re trying to do is incentivize these corporations to give more by increasing the return on images – basically, people know that they’re giving,” Naayem said. “What they’re really marketing is the fact that they’re giving, more than anything else…. I would buy Pepsi over Coca-Cola, or go to Citibank versus Wells Fargo, if I knew that they were helping out students to go to college, or if they were helping out children in Africa.”

That’s the other part of the deal – students must donate at least 10 percent of their winnings to one of about 10 charities selected by Grantoo. (So far, on average, students have elected to donate 35 percent.) Those charities must dedicate at least 75 percent of donations directly to the cause, and they include education and health organizations such as Pencils of Promise, Engineers Without Borders, and Mama Hope.

“A big part of what we’re doing is trying to introduce students to philanthropy,” Naayem said. “By getting them engaged like this, we hope that they’ll maybe want to donate their time” to charity in the future.

Up until last week, only students on about 40 campuses across the country could participate, but the site is now open to students from any college. Many of the campuses with the highest participation are in California (Grantoo is based in the Bay Area), but the two institutions with the most participants -- “randomly,” Naayem said -- are Elon University in North Carolina and the University of Florida.

While Naayem doesn't know exactly who the students are who participate, he believes that they are truly students who were already playing games online -- not ones who would otherwise be working part-time jobs or finding potentially more productive ways to pay their tuition.

"We're not distracting people from either studying or working, but our goal is really to get people who are wasting their time on games," he said: Grantoo attracts a person who already spends two hours trying to earn the "golden cow badge" -- or whatever other prize is awarded in your given online social game -- not one working part-time who would quit a job to sit around practicing for tournaments.

Naayem hopes to work up to bigger brand sponsorships and tournaments with payouts as big as $50,000 by September, and to eventually hit the $100,000 mark.

But Romer was skeptical of how long Grantoo can keep this up.

“This is an intriguing idea, and if they can get funders who see this as a way to funnel money to needy organizations and students,” he said. “I guess in a way it sounds almost a little too good to be true. But, you know, maybe it works.”

But, Romer added, if more and more students play, that’s going to mean Grantoo needs more and more money to make the payouts worth their while. So a lot will hinge upon whether the company can continue to attract sponsors – namely, big-time brands with lots of cash on their hands.

“Would this work if everybody started doing it, is really the big question. I mean, online gambling, you can do that no matter how many players you have,” Romer said. “There’s got to be a point at which this doesn’t work, unless they have an unlimited amount of money.”