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PaperclipPerfector  2d ago (text post)   1112 thread views

Friday Fun Thread for December 5, 2025

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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This seems like one of those Late Stage Capitalism style ads that were in the RoboCop movies, except these people are apparently serious?

https://www.coverd.us/

Just gamble with your credit card bill?

Does anyone think this shouldn't be illegal?

$1045 at Trader Joes?

Sounds about right for one cart's worth.

Can anyone explain to us - the poor debit card peasants, wtf is this thing? I watched the materials and still have no idea what it is supposed to do.

From the press release, it sounds like the cash back on each purchase is dynamically determined by some sort of mini-game. Normally credit cards have fixed rewards - eg. 3% back on groceries, 2% on gas, 1% on everything else. I think the idea here is that instead you'd have a small chance of getting a large discount by playing a digital slot machine or something, averaging out to the industry standard of 1-2% cash back over the long term. But gamified in a way designed to be addictive.

The other issue is whether this is the thin edge of the wedge - once you've normalized your customers gambling for discounts, why not integrate it with an actual online gambling platform?

Yeah the business model as it actually exists is too dumb for words, but when you consider it as potentially a play to get a bunch of really gullible problem gamblers all on one platform, then it becomes impressively evil instead of just stupid.

Thinking about it I wonder if there's a tax play here. Gambling winnings are fully taxable, but credit card rewards aren't...

Combining shopping addiction with gambling addiction? That's not dumb. They don't need many people to sign up, marginal costs are near zero, and technically it's not even a casino. Or at least that's what their lawyers told them to tell the regulators. Whether or not regulators would believe that BS is entirely different business, but until they wake up, there could be some money to be made.

Well, think of it like this: You're a credit card. Your business model is to take 1.9% of every transaction on your cards as an interchange fee, and hopefully get them into your wider services ecosystem. So, you've got to acquire customers, and the main way you do that these days is with rewards/perks. Just as an example, Capital One is trying to go after a higher-value market segment lately, so they're greatly expanding their travel rewards program (complete with new airport lounges), offering some of the best cash-back business cards going, opening cafes with discounts for cardholders, yada yada. That makes sense.

What doesn't make sense is Coverd.

First off, by definition, cashback rewards are the lowest-value. Banks love airmile rewards because filling an empty seat is ~zero marginal cost for an airline, so airlines can happily sell airmiles at a steep discount to banks to give out as rewards, and the aspirational nature of travel makes it particularly good for customer acquisition. Same but less for other credit card perks, like a Sam's Club membership or whatever, they'll negotiate with Sam's Club and drive the price down etc etc. Cash back, though, the simple rule is that you cannot return more than the interchange fee to the customer (with some exceptions that don't matter here). Customer gets 2%, max, and that's if you really like him and think he'll spend a lot.

So, following on from that, if you're Coverd, you have two options: Give your customers some gatcha, addictionmaxxing, whatever game they can play on each purchase which will never pay out more than an average of 1.9% rewards, or do the same and burn VC money to offer jackpots to get people to sign up. After all, it doesn't work if not that many many people sign up - beyond the startup growth issue, you're going to need a lot of people spending if you're going to offer meaningful jackpots paid out from interchange fees. And it particularly doesn't work if not many people sign up because launching a credit card is an extraordinarily expensive endeavor. It's a Series A raise goal to begin with just to get it off the ground. Then, after that, you're pretty much taking on the credit risk of your customers and floating it every month, and then you have to go to a bank for a warehouse loan or whatever variety of line of credit you're using to back that up and saying "yeah we have a credit card which is exclusively designed for gambling addicts, would you please underwrite us?"

I'm calling my shot here. Coverd will never launch as a credit card company. But as some kind of addiction sales funnel to the depths of hell, I'm sure they'll do fine, just gotta pivot further to moloch.

The part you are missing here is that interchange fees is not the only money maker. At least equally important, maybe more important, money are in people that over-consume credit, and pay absolutely humongous credit rates. You need to lure in those people, and abuse them to the max. Adding gambling addiction component fits very well - this is exactly the sort of people that tend to overconsume their credit in the hope of one day winning big. And unlike traditional gambling industry, which is by now pretty heavily regulated, you can put in whatever technology with whatever winning chances and algorithms optimized for maximum addictiveness, at least until the regulators catch up. That's the whole point - it's not targeted for regular "get my 2% and pay off the card each month" consumers. It's exploitative from the ground up.

because launching a credit card is an extraordinarily expensive endeavor.

That part I am not sure I understand. I mean, marketing expenses, sure. But otherwise, it's just bits in some config files somewhere in the existing systems. Why is it expensive? It's a mass industry by now, everybody has their own CC brand.

"yeah we have a credit card which is exclusively designed for gambling addicts, would you please underwrite us?"

Sure, a traditional bank probably won't want to be associated with a gambling business. But somebody runs all those gambling businesses, and they have money too. A lot of money, probably, so convincing them to invest into yet another way to exploit gamblers wouldn't be impossible.

I agree, it’s a bad model. Cashback gambling for the purchase price of a random thing isn’t a big incentive because (a) the total amount you can make - even if you use your spin only on, say, your largest credit card purchase every month - is never life changing, and (b) because the comparison to the other rewards you mention will be unfavorable. The big premium cards also ensure the annual fee (which is like $800 for the American Express card now) covers the ‘rewards’ so that it doesn’t matter if people only put a few purchases on it. A database and captive audience of gambling addicts could be very valuable, but having that because your business is lending to them is, as you say, less valuable.

which is like $800 for the American Express card now

Amex gold is $325, Amex Platinum is $825. There are way more expensive ones. I regularly get mailers where they confuse me with somebody who would pay such amount of money for a card. And tbh, if I were twice as rich and led a completely different lifestyle, this kind of annual fees make sense - the value of the benefits, if bought at retail, and if I would actually use them, usually several times over the annual fee. It's just I wouldn't even need it. Though I do have a couple of $95 cards, because I do get over $100 value per year out of them. But this is completely different model - that's just prepaying stuff in bulk.

but having that because your business is lending to them is, as you say, less valuable.

Well, it's a different business, of course, but there is a whole industry built on exploiting people with bad habits and bad credit. Payday loans, subprime loans, title loans, all that crap. This is just the same business, but 2.0 with cellphones and algorithms.

Maybe they're communist accelerationists? Best case capitalism collapses under the strain of all of the wanton grifting, worst case they can say they tried but failed but hey at least they got rich?

Link

Created by problem-solvers with expertise in derivative pricing, high frequency trading, and software engineering from Morgan Stanley, Hudson River Trading, Google, and Meta

If there is any group of people that I want to trust with my money and that I would absolutely believe do not want to exploit my weaknesses for financial gain, it's a bunch of people from HFT, derivative trading and Google/Meta.

Technically, in normal gambling you are stastically certain to lose over time, whereas if you don't change your purchasing habits here you can only win.

(Give the Devil his due.)

But yes, obviously that's not going to be how it goes and this thing should be nuked from orbit.

Your link is not sufficiently informative to enable a reader to form an opinion. This press release is a bit more enlightening.

Coverd, a new fintech startup reimagining personal finance for the next generation, today announced the official launch of its mobile app—now available for download on the App Store and Google Play.

Coverd transforms routine purchases into engaging opportunities to win back real money. Each transaction, whether it's game day tickets, a table at a club, or groceries, unlocks a chance to play a mini-game and win up to 100% of that purchase amount back.

Thank you.

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