Sessions Ending Obama-Era Policy That Ushered In Legal Weed

Attorney General Jeff Sessions is rescinding an Obama-era policy that helped states legalize recreational marijuana, throwing a wet blanket on the fledgling industry during what could have been a celebratory week.

The Justice Department will reverse the so-called Cole and Ogden memos that set out guardrails for federal prosecution of cannabis and allowed legalized marijuana to flourish in states across the U.S., according to two senior agency officials. U.S. attorneys in states where pot is legal will now be able prosecute cases where they see fit, according to the officials, who requested anonymity discussing internal policy.

Shares of pot companies plunged as news of the policy change surfaced, though many began to rebound after investors weighed the potential impact.

The change comes at a high point for the weed industry. California, the biggest U.S. state and sixth-largest economy in the world, launched its legal marketplace on Jan. 1. Sales in California alone are expected to reach $3.7 billion in 2018, according to estimates from BDS Analytics. 

Seven other states and the District of Columbia have also legalized cannabis for adult use. Twenty-one additional states have voted to allow the plant to be used for medicinal purposes. The market is expected to skyrocket from $6 billion in 2016 to $50 billion by 2026, according to Cowen & Co.

Sessions, a Republican from Alabama, has long been opposed to marijuana, equating it with heroin. But this is the first action he’s taken that deviates significantly from the Obama administration. Many in the industry said the news is unsurprising but disappointing.

“While dismantling the industry will prove impossible, the move by Sessions will sow more seeds of uncertainty in an industry that already has its fair share of risks and unknowns,” said Chris Walsh, vice president of Marijuana Business Daily. “Businesses could be in for a bumpy ride amid this uncertainty, and we certainly could see some types of regional crackdowns or delays in upcoming medical or recreational cannabis markets.”

Shares Plummet

The Bloomberg Intelligence Global Cannabis Competitive Peers Index dropped as much as 24 percent after the Associated Press first reported the Justice Department plan. Most companies in that group are small. Still, there are a few big names that could be hit by the changing policy. 

Constellation Brands Inc., which sells Corona beer and Svedka vodka in the U.S., got involved in the cannabis industry in October when it acquired a minority investment in Canopy Growth, a Canadian marijuana company. Scotts Miracle-Gro Co. has also made its way into the Green Rush. It fell as much as 5.7 percent after the news, the biggest intraday drop since May. 

A tightening of enforcement also would be felt in Canada, where the cannabis industry has blossomed. Ontario’s Canopy Growth fell as much as 19 percent to C$29.06 in Toronto, while Aphria Inc. plunged as much as 23 percent to C$16.59. ETFMG Alternative Harvest ETF, the first pure-play pot ETF to be listed in the U.S., dropped as much as 9.7 percent, the biggest intraday decline since May.

Fear and Doubt

Sessions’s policy may cause investors to think twice before putting their money into the Green Rush, according to Adrian Sedlin, founder of Canndescent, a marijuana cultivation and branded-flower company.

“Fear, uncertainty and doubt will rip through our industry like a California wildfire because of this,” he said. “Whatever happens longterm, this will retard and limit capital flows into the industry for the foreseeable future.”

The move is likely to sow confusion among consumers and state officials, and may spark a backlash if state-approved retailers are prosecuted. Sixty-four percent of the U.S. population now wants to make pot legal, according to a Gallup poll released in October.

But it’s too late to stop the industry from growing, said Laura Bianchi, a partner and director of cannabis, business and corporate transactions and estate planning at Rose Law Group in Scottsdale, Arizona.

“To undo this industry would be like closing Pandora’s box once it’s been opened,” she said. “It would be a Herculean effort that would undermine another Republican cornerstone, which is the importance of states’ rights.”

Senators React

Senator Cory Gardner, a Republican from Colorado, where marijuana is legal, said in a tweet that Sessions’s move contradicts what he told the senator before his confirmation.

“I am prepared to take all steps necessary, including holding DOJ nominees, until the Attorney General lives up to the commitment he made to me,” Gardner said.

Senator Kirsten Gillibrand, a New York Democrat, said Sessions’s actions are an affront to medical patients who need to use the plant as medicine. 

“Parents should be able to give their sick kids the medicine they need without having to fear that they will be prosecuted,” she said in a statement. “This is about public health, and it’s about reforming our broken criminal justice system that throws too many minorities in prison for completely nonviolent offenses.”

Still, the federal policy change may not actually hurt business much at all. Entrepreneurs starting marijuana businesses have already been working under risky circumstances. The plant has remained federally illegal, meaning most large companies — including banks — have shied away. Instead, the business has relied on state regulators, many of whom previously said they would defend the industry through any federal crackdown. 

“We’re not overly concerned that a change in DOJ policy around cannabis will be meaningfully disruptive to legal adult use cannabis states, given the vocal support offered by these state-level AG’s,” said Vivien Azer, a Cowen & Co. analyst who covers the industry.

    Read more: http://www.bloomberg.com/news/articles/2018-01-04/sessions-said-to-kill-obama-policy-that-ushered-in-legal-weed

    When Your Activity Tracker Becomes a Personal Medical Device

    Fitbit spent its first decade selling activity trackers. With its latest moves, the company is starting to look less like a gear maker selling pricey accessories to fitness buffs and more like a medical-device company, catering to hospitals, patients, and health insurers. The company’s business-to-business arm, called Health Solutions, is now addressing four health conditions—sleep disorders including sleep apnea, diabetes, cardiovascular health and mental health—for employers, health insurers, healthcare providers, and researchers.

    Fitbit has deals with insurers like UnitedHealthcare, which pays its clients up to $1,500 a year for hitting step-count goals. United has done years of research to calculate its return on these payouts, says Fitbit CEO James Park. “The business models are finally catching up to the data we have been collecting.” The next stage is to add in heart rate data, he says.

    Fitbit’s newest product, the Ionic smartwatch, uses a blood-oxygen sensor to screen for sleep apnea and detect a type of heart arrhythmia. The company has completed clinical trials on the use cases and will submit them to the US Food and Drug Administration for approval. If it receives approval, Fitbits could replace expensive chest patch scanning to perform initial screenings for atrial fibrillation on some patients, Park says. The company’s data has been popular with cancer researchers.

    There are plenty of reasons behind the company’s transition: For one, Fitbit will always battle high abandonment rates. (“Fitbit? More like Quitbit,” The Atlantic once quipped.) Fitbit’s sales of fitness trackers, and in turn, its stock price, have reflected that fatigue; revenue fell 22% last quarter and its stock is trading at a 77% discount to its opening price in 2014. But most important, the company needs to differentiate its offerings from the Apple Watch, which debuted in 2015 and has studies that address some of the same areas Fitbit is chasing. Fitbit beat Apple in the third quarter in terms of devices shipped, taking 13.7% of the market, according to IDC. Apple, which took 10.3% of the market, experienced a dramatic increase in sales, while Fitbit continues its decline.

    Fitbit believes its position as a neutral player that works with any phone makes it desirable to insurance companies and hospitals. Apple Watches only work with iPhones; if an employer, hospital or insurer wants its clients to use them, it won’t be able to reach people who have Android phones.

    Fitbit’s push into medicine is not without risks. Park agrees that over time the company’s products will become a form of medical device, but he’s reluctant to call them that outright. The company’s brand is valuable because of its association with fitness and self-improvement, and consumer psychology is a critical component in making sure something like a step tracker is successful, he says.

    “There is a dramatic difference in consumer acceptance and engagement when you say, ‘Hey, here is a medical device from Medtronic, go wear it,’ versus, ‘Here’s a Fitbit, wear this instead,’ ” Park says. “One is aspirational, the other implies that you’re sick. Consumers just go in with a different mentality based on how it’s portrayed and that is actually really, really important.”

    That’s why Fitbit is participating in a new FDA precertification program aimed at digital health products, announced in September. “The FDA recognizes that there is this potentially new class of devices that’s not a consumer device and not a traditional medical device, but somewhere in between, and that there needs to be a new regulatory pathway,” Park says. Fitbit’s rival, Apple, is also a participant.

    CORRECTION, 12:55PM: Fitbit plans to seek approval from the US Food and Drug Administration to use data from its devices to screen for atrial fibrillation. An earlier version of this article said Fitbit was awaiting FDA approval.

    Read more: https://www.wired.com/story/when-your-activity-tracker-becomes-a-personal-medical-device/

    Target to Buy Shipt for $550 Million in Challenge to Amazon

    Target Corp. agreed to purchase grocery-delivery startup Shipt Inc. for $550 million, stepping up its challenge to Amazon.com Inc. by speeding the rollout of same-day shipping.

    The all-cash deal will let Target customers order groceries and other goods online, and then have the items sent directly to their doors from nearby Target stores.

    Buying Shipt further beefs up Target’s logistics operations after the retailer earlier this year acquired software company Grand Junction, which also manages local and same-day deliveries. Target now offers same-day delivery in New York City and can send orders from 1,400 of its stores. Competition in this space is growing fiercer, though, as rivals Wal-Mart Stores Inc. and Best Buy Co. also offer same-day service, keeping pace with Amazon.

    Target’s decision to buy Shipt, rather than partner with it, “shows how serious they are,” Kantar Retail analyst Robin Sherk said. “One-stop shopping was convenient in the 1990s but for today’s families you have to be able to do instant food delivery as well. It’s also a realization that Amazon, this big technology disruptor, has entered the consumer landscape.”

    Four out of five shoppers want same-day shipping, according to a survey by fulfillment software maker Temando, but only half of retailers offer it.

    “With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” John Mulligan, Target’s chief operating officer, said in a statement.

    The deal will give Target same-day delivery at about half of its 1,834 stores by next summer, with the number growing to a majority of stores in time for next year’s holiday season. The service — costing $99 a year for unlimited deliveries — will initially encompass categories like groceries, household essentials and electronics before expanding to all major product groups by the end of 2019.

    Improved Position

    “While it will not affect Target’s capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position,” Charlie O’Shea, an analyst at Moody’s Corp., said in a note.

    Target rose 2.7 percent to close at $62.67 Wednesday, while the news caused a momentary dip for the shares of Shipt’s existing retail partners, Kroger Co. and Costco Wholesale Corp. Kroger ended the day up 1.4 percent, while Costco was little changed.

    Kroger said it’s still optimistic about the company’s prospects for home delivery after expanding its logistics operations in recent years via partnerships with Instacart Inc. and others.

    “We feel really good about the variety of partnerships Kroger has going,” corporate communications head Keith Dailey said. Costco Chief Financial Officer Richard Galanti declined to comment.

    Online Preference

    Consumers’ increasing preference for shopping online, along with Amazon’s purchase of upscale grocer Whole Foods and its encroachment into new arenas like apparel, have sent retailers scrambling to improve their online offerings. E-commerce sales are up about 17 percent this holiday season, according to Adobe Systems Inc., and online merchants racked up a record $6.59 billion on Cyber Monday alone, the company found.

    The question for traditional retailers is how to handle all those internet orders. They could build their own delivery network, but it’s an arduous and expensive process. That’s why many of them are seeking help from e-commerce startups like Shipt and Instacart.

    Founded in 2014, Shipt serves about 20,000 customers through partnerships with retailers including Publix Super Markets Inc., HEB Grocery Co., Kroger and Costco. It will continue to operate independently and plans to expand its business with other retailers, Chief Executive Officer Bill Smith said in an interview.

    ‘Scale Matters’

    “We’ve spoken to a number of our existing partners about this deal and all the conversations have been very positive,” Smith said. “Having multiple retailers allows us to grow our membership base and make it more attractive. In same-day delivery, scale matters.”

    For now, Target shoppers will need to pay Shipt’s $99 annual membership fee to gain access to the service. Once a customer orders, they send a “shopper” into the store to grab the groceries, and then deliver the items. Target is working on how to integrate Shipt into its website and mobile shopping app, Mulligan said.

    The deal is expected to close before the end of the year and will be “modestly accretive” to Target’s profit in 2018, while boosting online sales, the company said. The retailer’s e-commerce sales already grew 24 percent in the third quarter.

    ‘Big Loser’

    Target has worked with Shipt’s rival Instacart for same-day service in cities like Minneapolis and Chicago since 2015, and Mulligan said he “will have conversations with them on where we go next.”

    “The big loser in this deal is Instacart,” said Cooper Smith, an analyst at business-intelligence firm L2.

    Following Target’s announcement, Instacart said it works with more than 165 retailers, including seven of the eight biggest grocers in North America.

    “As an independent company, Instacart doesn’t compete with any of our partners,” the company said. San Francisco-based Instacart has recently expanded its partnerships with retailers including Costco, Kroger, Albertsons Cos. and drugstore giant CVS Health Corp.

    Target and Shipt began discussing the deal in the middle of the summer, Mulligan said. They decided to pursue an acquisition rather than just a partnership in order to plow Target’s resources into expanding Shipt’s business, and to maintain its current level of customer experience.

    Smith will stay in his role, reporting to Mulligan, and its 270 employees will remain in Shipt’s offices in San Francisco and Birmingham, Alabama.

      Read more: http://www.bloomberg.com/news/articles/2017-12-13/target-to-buy-shipt-for-550-million-in-bet-on-same-day-delivery

      The Overwatch Videogame League Aims to Become the New NFL

      Stefano Disalvo is a professional athlete.

      He has the physical gifts of a professional athlete, the dedication and drive of a professional athlete, the monomaniacal schedule of a professional athlete. He wakes up at 6:30 in the morning and spends some time reviewing game tape of his own performance before calisthenics begin around 9—jogging, frisbee, soccer—followed by practice, seven straight hours of it, where his team plays against some of the finest competition in the world, testing new strategies. Then a team meeting at night to discuss the day’s mistakes and how to correct them, after which he will spend another few hours practicing alone or interacting with his fans or studying his rivals or, sometimes, all three. Then bedtime, before doing the same thing again tomorrow.

      It’s likely you’ve never heard of Stefano Disalvo. You probably haven’t heard of his team either. You maybe haven’t heard of his sport, and even if you have heard of his sport, you wouldn’t know him as Stefano ­Disalvo—he’s known as “Verbo,” one of the top players in the world at a videogame called Overwatch. He’s 18 years old, and he has just signed his first major professional contract: He’ll get a nice salary, a robust health insurance plan, free housing, and a 401(k). And beginning this month, his team, the newly formed Los Angeles Valiant, will be one of 12 competing in a first-of-its-kind global esports league, a grand experiment involving some of the biggest names in sports and entertainment who believe Overwatch can rival traditional sports in audience and revenue. If this league succeeds—if its players, coaches, franchise owners, and front-­office executives can overcome a skeptical audience, a complicated and sometimes baffling game, and big problems of inclusion and harassment—then gamers like Disalvo, who have mortgaged their entire adolescence for this one shot at glory, could be among the first athletes to get very rich playing videogames, in front of people, for money.

      Welcome to the future of sports.

      If you are, like me, of a generation where videogames were not a spectator sport except for maybe gathering around the arcade to watch someone who’s really good at Street Fighter, then you could be forgiven for not knowing all of this was going on. The phenomenon of esports—people playing against each other in live videogame competitions—is still so new that there isn’t even consensus about how to spell it: I’ve seen esports, e-sports, E-sports, and eSports.

      I should say, actually, that esports are relatively new—that is, new for some of us. But for the professionals who play, who are almost uniformly between the ages of 17 and 26, it’s something that’s been around for most of their lives and something they take for granted. When Disalvo was a 16-year-old high school student in Toronto, he already knew he wanted to be an esports professional. He knew this mostly through a process of elimination: He had tried every other thing, and none of them felt transcendent or even interesting. He played hockey and tennis, he swam. He took all the classes you’re supposed to take, and when ­people asked him what his favorite subject was, he’d say lunchtime. “I was trying to find something that I loved doing,” Disalvo says. “I honestly didn’t really enjoy anything.”

      There was one thing he did enjoy, though, a secret he kept from almost everyone: He loved playing videogames, and he was extraordinarily good at it. And when he saw players winning tournaments for games like League of Legends, he decided that he wanted, more than anything else, to do that.

      A basic problem, though, was that League of Legends already had a well-established and very competitive esports scene, and the path to becoming a pro in that game seemed very narrow. However, in November 2014, Disalvo saw that Blizzard, the company behind such massive franchises as Warcraft, StarCraft, and Diablo, was developing a new game. It was called Overwatch, and it looked to be a first-person shooter. Knowing that most of Blizzard’s games eventually generate big esports scenes, Disalvo decided to switch. “New game,” he says. “Everybody’s starting at the same level. It’s not as if I have to catch up to all the other professional players.”

      Stefano Disalvo, better known as Verbo, is one of the world's top Overwatch players.
      Damon Casarez

      I was surprised to hear this, as I’d assumed that pro gamers began playing a game because they enjoyed it and then gradually became good enough to turn pro. But Disalvo decided to make Overwatch his young life’s work before he’d ever even played it. “I saw the esports potential,” he says with a shrug. “I didn’t care if the game was fun.”

      He got access to the Overwatch beta and committed himself to mastering the game. He stopped eating lunch with his friends, using that time to finish homework so he could go home and play Overwatch for seven hours straight. He didn’t go to parties, he didn’t go out with friends, he didn’t date, he wasn’t in any way social.

      If you’re thinking that Disalvo fits the stereotype of a friendless, socially awkward gamer, disabuse yourself of that notion. He’s an affable and confident young man who’d been a swim instructor, a lifeguard, and an excellent hockey player. He has a good sense of humor, and when he laughs, he looks startlingly like James Franco. In other words, if he’d wanted to date, he probably could have. But he didn’t, and his classmates didn’t know what to make of it.

      Playing the beta, and before Overwatch was even officially released in May 2016, Disalvo began competing in amateur tournaments. He started playing even longer hours, and his studies suffered. His mother demanded he focus on school, but he announced he was going to be an esports professional. His mother said no, he was going to college. He said no, he was skipping college to go pro in Overwatch. Looking back, he’s not sure how that standoff would have been resolved were it not for a job offer that came two weeks after his mother’s ultimatum. A professional esports outfit wanted him on its Overwatch team, and it wanted to move him to Southern California to live and train with his teammates.

      Armed now with an official contract, Disalvo went back to his mother, and she eventually agreed to let him leave school early, on the condition that he would finish his diploma online. Most of his classmates were mildly puzzled by his sudden disappearance. There were rumors about California. Were it not for a yearbook article about his new career, it’s possible that his classmates would still be asking: Whatever happened to Stefano Disalvo?

      Mei is one of dozens of heroes in Overwatch.

      Blizzard Entertainment

      Jeff Kaplan, who oversees all things overwatch at Blizzard, says that when developers began work on the game in 2013, they felt the need to create a world wholly apart from the trio of worlds that the company already offered: the high fantasy of Warcraft, the space opera of Starcraft, the gothic horror of Diablo. What would be the most unexpected, most fantastical place they could take gamers next?

      The answer, they decided, was Earth.

      The team ultimately began working on a game that would be Blizzard’s first entry into the popular first-­person-shooter genre, and they would set it on Earth, sometime in the not-too-distant future.

      But when they began researching other earthbound first-person shooters, they found a surplus of what Kaplan calls “cynical, borderline post­apocalyptic dystopia.” In other words, morbidly dark, gritty, and depressing. Lots of blood and gore. Games you’d feel a little weird about if you played them in front of your kids.

      This led the team in a different and sort of radical direction: optimism. “We wanted it to be a future worth fighting for,” Kaplan says. “So it’s a bright, aspirational future, and when conflict happens you have to go out and defend it, because this world is so awesome we can’t let anybody ruin it. So it really led us to a place of hope.”

      The basic premise of the game is that AI robots, designed to usher in an economic golden age for humanity, try to take over the world. To respond to the crisis, the United Nations forms Overwatch, a team of fighters and adventurers recruited to quash the robot rebellion. The Overwatch forces defeat the robots, and then end up battling each other.

      These characters—they’re called “heroes” in Overwatch lingo, and there are 26 of them as of this writing, though Blizzard tends to update this a lot—are the beating heart of the game. As opposed to many other first-person shooters, where your avatar is just a kind of anonymous good guy or bad guy, the heroes you play in Overwatch have personality. They have persuasive origins and very human hopes and fears and complicated relationships with the other heroes. There’s Mei, for example, a climate scientist who was stranded in her research station in Antarctica and has since become this gallant adventurer who never­theless still wears these huge, nerdy round glasses and an adorable poofy coat. Or Bastion, an anthropomorphic machine gun who’s friends with a tiny delicate bird that he gently cares for. This game doesn’t just have backstory, it has lore, which is all explicated in animated web movies and comic books that are intended to drive “deep engagement,” to borrow the language of Blizzard’s quarterly reports.

      Overwatch super fan Marcus Silvoso dressed as the healer hero Lucio.

      Damon Casarez

      Overwatch super fan Dorothy Dang as the tank hero D.VA.

      Damon Casarez

      The game is team-based, six versus six. If you’re playing Overwatch, you are playing with and against other real people who are connected to the internet and seeing and hearing the same things as you. You can play as any of the 26 heroes, even swapping from one hero to another during the course of the game. Mostly, the game is played as a series of timed rounds: The attacking team has four minutes to capture certain areas or move a payload (think: the pigskin going downfield) while the defending team tries to thwart them. Once time’s up, attackers and defenders switch roles for the next round. Whichever team captures more areas or moves the payload farther wins the game, and if a player is killed in action, they have to wait 10 seconds (sometimes more) before rejoining the fight.

      The formula—refreshing optimism plus interesting heroes plus shoot-’em-up action— was an immediate hit. Overwatch became Blizzard’s fastest-growing game ever, a best seller that, after a little more than a year, has 35 million players and generates more than a billion dollars annually.

      Nate Nanzer, who was Blizzard’s global director of research and consumer insights leading up to Overwatch’s launch, says the game’s popularity comes, in part, from gamers’ love for the heroes, noting particularly the significance of a lineup that “looks like what the world looks like,” by which he means racially diverse, multinational, and equitably gendered.

      The other thing Nanzer noticed early in Overwatch’s development cycle was a surge in interest in video­games as a spectator sport. Esports originated largely in South Korea, with the game StarCraft: Brood War, roughly 20 years ago, and eventually found its way onto Korean television. Then it jumped to Korean internet streaming platforms around 2003, which is when North American gamers began getting clued in. The popularity of gaming streams eventually gave rise to Twitch, a platform that launched in 2011 and specializes in videogame livestreaming. By 2014, when Amazon purchased Twitch for almost a billion dollars, the total number of minutes that people spent every year watching other people, mostly strangers, play video­games on Twitch was 192 billion. By the end of 2016, it had risen to 292 billion.

      Even while Overwatch was in beta, fans and entrepreneurs were already organizing Overwatch tournaments, broadcasting matches live on Twitch. It was completely grassroots, seriously hardcore, totally decentralized, and kind of a mess. Nanzer wondered what would happen if Blizzard could take control of the tournaments. “If we structure a league the right way and put the right investment behind it, we can actually monetize it in a way that’s not too dissimilar from traditional sports,” he says.

      Enter Overwatch League.

      Blizzard announced the venture in November 2016 at Blizzcon, the company’s annual convention. Overwatch League would be the world’s first esports venture to follow the North American sports model: franchised teams in major cities, live spectator events, salaried athletes. Along with all the revenue opportunities offered by sports leagues—ticket sales, media rights, licensing, and so on—there were also opportunities for “team-based virtual merchandise.” For example, fans might be able to buy a “skin” so that when they’re playing Overwatch at home, their hero will be wearing the jersey of the Los Angeles Valiant.

      “We are literally building a new sport,” says Nanzer, who was appointed the league’s commissioner last year. “We’re trying to build this as a sustainable sports league for decades and decades to come.” And while you might think, at first glance, that such an ambition is outrageously optimistic, the expertise recruited may change your mind. The co-owner of the Boston Overwatch franchise, for example, is Robert Kraft, who also owns the New England Patriots. The owner of the New York franchise is Jeff Wilpon, COO of the New York Mets. Philadelphia’s Overwatch team is owned by Comcast, which also owns the Philadelphia Flyers. Blizzard hasn’t made public the cost of a league franchise, but the reports are $20 million, and when I asked Nanzer about that number, he neither confirmed nor denied it, saying: “You know, if you hear the same rumor over and over again, you can figure out what that means.” So, OK, $20 million.

      “There’s going to be kids who can say ‘I play professional Overwatch for the same guy that Tom Brady plays for,’” Nanzer said. “That’s pretty cool.”

      Perhaps the most high-profile executive recruit for Overwatch League is Steve Bornstein. One of the early architects of ESPN and a former president of ABC Sports, he left his most recent job as CEO of the NFL Network to become Blizzard’s esports chair. When asked why he made the change from traditional sports to electronic, Bornstein borrows an old Gretzky quote: “Skate to where the puck is going.”

      “When I left the NFL, the only thing I saw that had the potential to be as big was the esports space,” he says. “What fascinated me was just the level of engagement, the fact that we measure consumption in billions of minutes consumed.”

      And it’s growing, especially among younger people, which is not something that can be said of traditional sports. For the cord-­cutter and cord-never generations, sports tend to be behind what is, in effect, a giant paywall. The big, exclusive contracts that leagues sign with the TV networks mean there are few other ways to access sports content—which seems annoying or downright bizarre to ­people accustomed to getting their entertainment for free on YouTube.

      The kill cam says, This is how you were killed, so let's avoid that in the future.

      Every major sport in the US has seen the average age of its viewership increase since 2000. The NBA’s average fan is 42. The average NFL fan is 50. The average MLB fan is 57. What’s more, these audiences are limited almost entirely to North America. The Overwatch League, meanwhile, will begin with nine US teams and three from abroad—Shanghai, Seoul, and London (with more, I’m told, on the way)—and its average fan is a demographically pleasing 21 years old.

      There’s no better symbol for Blizzard’s confidence in the game’s potential than the place it chose for its new home: Burbank Studios, Stage One. If that sounds familiar, it’s probably because it’s the very same soundstage that Johnny Carson used when he brought The Tonight Show to California. Every match of Overwatch League’s inaugural season will be played here, while the teams work with Blizzard to bring matches to their respective hometowns in future seasons.

      The studio’s centerpiece is the long dais up front, big enough for two entire Overwatch teams—six players on the left, six on the right. Each player will have their own personal pod (Blizzard’s term for what appears to be a simple table), and each pod is separated from the adjacent pods by a space of a few inches, because apparently some players can get a little excited during a match and bother their neighbors with their table-tapping or knee-banging or fist-pounding. Every player is issued a standard desktop computer and a standard monitor (144 hertz), though many players like to choose their own keyboard and mouse. Above everything are three enormous LED screens, approximately 20 feet by 11, that will be showing the audience the in-game action, as well as intermittent close-ups of the players themselves, their faces, their twitching hands.

      The studio’s centerpiece is a long dais, big enough for two entire Overwatch teams—six players on the left, six on the right.

      Damon Casarez

      Kitty-corner to the players, stage right, is an elevated desk for the on-air talent—the hosts and analysts and interviewers. Backstage, these folks get their own hair and makeup room, one of the few places still serving its original Tonight Show function. Next to the analysts’ desk is a room for the “shoutcasters,” which are what play-by-play commentators are called in esports. The term was coined in the earliest days of esports, before high-speed broadband made video streaming possible; the feeds were audio-only, and commentators used a Winamp plug-in called SHOUTcast to broadcast their voices. The name lives on, though. There’s even a paper taped up on the door that says shoutcasters.

      Taped to the next door, a piece of paper says observers, which strikes me as sort of sinister, like the Eyes from The Handmaid’s Tale. The Observers are actually cinematographers who operate in the game’s digital space. If you’re watching an Overwatch match, you might be watching it from the point of view of one of the players or from the point of view of one of the Observers, who float around the players and capture the in-game action as it unfolds. Imagine a camera operator at a hockey match skating around on the ice with the players and yet magically not interacting with them in any way. The Observers are like that.

      Directly across the hall from the Observers is where the technical stuff happens, all the wizardry needed to create a professional-looking sports broadcast: a whole room for instant replay, two rooms for audio, two control rooms with walls of flatscreen TVs. All told, it takes between 80 and 100 people to broadcast one match of the Overwatch League. Some of the people who work here say there’s a special significance in the league’s broadcasting from The Tonight Show’s old home. It’s an obvious metaphor: new media replacing old media. It all reminds Steve Bornstein of the moment in the early ’80s when he came aboard the fledgling ESPN, then only three months old. He says all the critics at the time argued there wouldn’t be any interest in a whole channel devoted to sports. Who would ever watch that?

      Shoutcasters provide real-time game commentary for both in-studio and streaming audiences.

      Damon Casarez

      My first time playing Overwatch was astounding to me for two reasons: first, for the sheer amount of onscreen information I was asked to digest at any given moment, the bullet tracers and grenade explosions, the bright blossoming energy shields and walls of ice that were sometimes mysteriously erected and then shattered, plus the head-up display overlaying various timers and health bars and glowing mission objectives, and sometimes floating yellow plus-sign things (which I eventually figured out meant I was getting healed by someone, somehow), plus all the pretty little environmental details like streetlamps that flicker a bit of lens flare onto your screen when you accidentally aim at them, the wooden chairs that splinter and the wine bottles that shatter when they take stray fire, not to mention the outlines of your teammates and all the enemy players who (for reasons that will become clear momentarily) tend to jump around constantly, spasmodically, almost insectoidally—all of this happening at the same time in a way that felt not only disorienting, not only mentally taxing, but more like New York City air-traffic-control-level overwhelming.

      The second thing I was astounded by was the number of times I died.

      It was a little surprising to me how quickly, simply, and even sort of eagerly my character bit it. I was playing a hero called Reaper, whose whole basic deal is to be an updated video­game version of the Undertaker character from WWF wrestling, circa-1990s, but with guns—a pair of shotguns that, instead of reloading, he tosses to the ground and replaces by grabbing two new ones from under the folds of his black overcoat. I’m running to get into place with my teammates, wondering what exactly I’m supposed to be doing, and also idly wondering how many shotguns Reaper can hide under that coat. (The answer, it turns out, is infinite. Infinite shotguns. He never runs out. Just go with it.) Suddenly a firefight erupts ahead of me and I run up to aid my companions and promptly get killed. Swiftly and abruptly and bewilderingly, I am dead. I have no idea why. This is when I am introduced to the kill cam.

      Let me tell you about the cruelty of the kill cam.

      After you die in Overwatch and the camera pans back to show your now lifeless corpse on the ground, you endure the kill cam, which shows you what you looked like and what you were doing the moment before you were killed, from the perspective of your killer. It’s like being able to watch your own face while getting dumped. As I died over and over, I would be treated anew to kill-cam footage showing just how long someone had me in their sights, how many shots they took before I even noticed, how I just stood there and sort of spun in place, dumbly looking around while my killer patiently picked me off. According to the game’s developers, the kill cam’s primary function is not actually sadistic, but educational. The kill cam says: This is how you were killed, so how about avoiding that in the future, eh?

      Reaper is an updated video­game version of the Undertaker character from WWF wrestling, circa-1990s.
      Blizzard Entertainment

      The fact that it’s so easy to be killed means that players in Overwatch are never still for a second, which presents a cognitive challenge: You must keep track of 11 other players who are always in motion while you yourself zig and zag. Overwatch is, above all, a team game, and you have the responsibility not only to avoid constant death but also to avoid constant death while helping your team execute the proper strategy. The 26 Overwatch heroes fall into four categories: eight are primarily damage-­dealers (offensive players that specialize in eliminating enemy players); six are defensive; six are “tanks” designed to soak up a lot of damage to protect their team; and six are healers who work as in-game medics. That works out to 230,230 possible six-hero “comps” (gamer lingo, born when the gaming community took the phrase “team composition” and nouned it), and to be good at Overwatch you have to recognize each of these comps, understand what effect they’ll have on your own team’s comp, and react accordingly.

      And by “react accordingly” I mean that you not only execute a certain strategy correctly, but you also, if necessary, do so with any number of different heroes. Overwatch involves constant on-the-fly improvisational skill, an almost instinctive reaction to ever-changing conditions inside the game. If you play a really great damage-dealer but the other team is running a comp that neutralizes your particular hero, you must be able to extemporaneously and at any time switch to a different hero with a different specialization that disrupts the other team’s strategy. Plus, each hero has up to four different abilities that they can deploy at various times, including an “ultimate” ability that takes a long time to charge up and, when spent correctly, can be a total game-changer. 
So that’s about a hundred different abilities from 26 different characters teamed up in one of 230,230 different combinations. It’s mind-boggling. The sheer number of variables in play seems to exceed the human brain’s ability to grasp the scale and scope of big things. Which raises a question: How is it even possible to be good at this? I decided to travel to Redondo Beach, California, to the house where Stefano Disalvo lives with his team, to find out.

      I arrive at the house at 11 am on a late September Friday, and ­Disalvo is sitting with his teammates in a large living room that has been completely transformed for gaming purposes. Seven small office tables have been arranged in two rows, each table equipped with a computer monitor, keyboard, mouse, and mousepad, with a mass of cables and wires spread out around the PC towers on the floor. Actually “towers” is the wrong word for these machines, which are enormous hexahedrons that look less like computers and more like glowing, diamond-shaped relics in a science-fiction movie about the future. All but one of the curtains are closed (to eliminate glare, I assume), though the windows are open for the welcome and pleasant California sea breeze.

      The house they’re sharing is a six-bedroom, 4,100-square-foot grand Spanish-style building with orange roof tiles and a three-car garage. The kitchen is ambitiously large, with a double oven and a wine fridge that is poignantly empty. Almost no one who lives here is old enough to legally drink.

      The team wakes early each day, and after reviewing footage of their performance from the previous day’s practices, they eat breakfast and walk to the beach for an hour of exercise. (Shane Flanagin, the team’s PR manager at the time of my visit, says the organization takes player health very seriously: They hire physical therapists, sports psychologists, and an in-house chef, and they have a daily fitness routine. “We don’t want them to be stuck in chairs for nine hours without moving,” he says—though from what I can tell, the players, left to their own devices, literally, would be happy to remain in their chairs for even longer.) By the time I arrive, the players are seated and warming up for their first “scrim” of the day.

      A scrim is the primary way a pro Overwatch team practices. The team’s coaches set up scrims with other pro teams, and the players will do three two-hour scrims a day, every day. Once the day’s first scrim begins, everything gets very serious, very fast. The players hunch their shoulders, and their eyes are about even with the top bevel of their monitor so that they’re looking down at the screen, which makes them appear, in profile, something like carnivores eyeing dinner. They give one another constant updates about what the other team is doing, what heroes are in use, what special abilities are available. Their shouted instructions and updates sound to me like soldiers speaking some kind of wacky code.

      “Monkey monkey monkey!”

      “Are they right or left?”

      “Clear left!”

      “Inside! Saloon! Saloon!”

      “EMP! EMP! EMP!” which, shouted very quickly, sounds like “empee empee empee!”

      In the kitchen, meanwhile, the team’s chef is busy cooking lunch. She seems to be successfully ignoring all of this.

      Members of Team Valiant practice—or play "scrims"—for at least seven hours a day.

      Damon Casarez

      Despite living together, the players do not call each other by their real names. They exclusively use their screen names, so much so that I find it odd and even jarring to call Disalvo “Stefano.” Here, he’s Verbo, and the teammates he’s playing with today are GrimReality (which everyone shortens to Grim), Fate, envy, and KariV, who, among all of them, seems the most likely to spontaneously shout or giggle or exclaim “What the fuck!” very loudly and, I would think, distractingly, though the other players don’t seem to care or even really notice.

      This is one of the ostensible reasons they all live together, so that they can get accustomed to each other’s tics and moods and can develop the kind of shorthand with one another that I usually associate with best friends or intimates. They come from very different places—Verbo is Canadian, Grim is American, while Fate, envy, and KariV are from Korea—but they need to communicate in the quickest way possible. Like the game itself, the team must operate with no lag.

      Sitting in an adjoining room, the team’s manager, Joshua Kim, and one of its coaches, Henry Coxall, observe that morning’s scrim in the game’s spectator mode. They discuss failures of strategy, how one player was baited into a disadvantaged position. But they also seem very attentive to their team’s emotional state. Any blip of negative emotion from any of the players is immediately registered and discussed. Kim talks about not bringing bad emotions to “work,” and how living together presents a challenge on this front.

      At 27, Kim is the old man in the house. I ask him whether it’s hard sharing a living space with a bunch of teenage boys—and, yes, they’re all boys, and with the exception of one 20-year-old, they’re all teens. The house itself bears the filthy evidence of this. The boys’ discarded shoes litter the front foyer. Their bedrooms are totally bare but for mattresses sitting on the floor surrounded by clumps of wrinkled clothes. The kitchen counters are covered with jars of peanut butter and Pop Tarts and a family-­size box of Frosted Flakes and protein powder in big bulbous jugs and a few spray bottles of Febreze.

      I won’t even tell you about the condition of the bathroom.

      But if this bothers Kim, he tries not to show it. “It teaches me patience,” he says.
As the first scrim ends, the players blink back into the reality of the living room, almost like they’re surprised to be there. There’s a sort of incorporeal quality to the players while they’re in the game: They play with such focus and intensity that, as soon as a match is over, it’s as if they suddenly realize they have bodies. They crack their knuckles and stretch and shake out the stiffness in their hands. They wander into the kitchen, where the chef has prepared a meal of mostly Korean fare: barbecued short ribs, glazed chicken drumsticks, and a really fantastic fried rice. The players consume all of this in less than 10 minutes.

      During their break I’m able to ask the questions that have been on my mind: How do you learn to play this game at a high level? And how do you possibly keep track of everything that’s happening onscreen?

      It’s Grim who first suggests the concept of “mental RAM.” The basic idea, he says, is that there is only so much the mind can process at once, an upper limit on the number of things any player can pay attention to; the key, then, is to put as many things on autopilot as possible, so you have fewer things to consciously think about. “For a lot of people who aren’t pro, aiming takes a lot of concentration,” Grim says. “It gives you less room to think about other things. So that’s why I practice really, really hard on my aiming, so I can think more about my positioning and what I need to do next.”

      Grim, whose real name is Christopher Schaefer, is 18 years old and from Chico, California. He is one of the team’s primary damage-dealers. Like Verbo, Grim wanted more than anything to be an esports professional. And like Verbo, he decided to go pro in Overwatch before he’d ever played it. When he first began the game—at 16—he was “really bad,” he says. “I would spend hours at a time just practicing flicks.”

      I interrupt to ask: What’s a flick?

      “It’s basically starting from one point of the screen and then snapping to the enemy’s head or something. And so it’s a very fast muscle-memory movement.”

      Being able to flick effectively is essential to pro play. It requires you to understand the exact ratio of mouse-movement to game-space distance, plus how to compensate if, for example, you’re moving left and your target is to the right, which will require an extra milli­meter or so of flick, and you have to possess the kinesthetic body awareness to do this with your hand and wrist perfectly almost 100 percent of the time. This is why pro players’ mouse choices are so personal and why the team insists that, with any sponsorship deal with any company that sells peripherals, players always get to choose their own mouse. Grim uses a Logitech G903 with a DPI of 800 and an in-game mouse sensitivity setting of 5. He is now, suffice it to say, extraordinarily good at flicking.

      “A lot of people think that I just have natural talent,” he says, laughing. “No, no, not at all. It took a lot, a lot, a lot of practice to be able to aim properly.”

      After the lunch break, the teammates return to their stations for more sitting, more scrims, more shouting.

      “Monkey’s up for a jump! Monkey monkey! I’m dead.”

      “Small regroup! Regroup!”

      “I’m on soldier, I’m on soldier!”

      “We have numbers! Let’s go!”

      “Monkey monkey!”

      About the monkey: One hero named Winston is a supersmart, genetically engineered gorilla who has the ability to jump really far, right into the middle of the scrum. And when an enemy team’s Winston lands nearby, he’s automatically your team’s number one target. If you take down Winston, you can really disrupt the other team’s strategy. So when he lands, everyone shouts his name. But because “Winston” is hard to say many times fast, Overwatch players started calling him “monkey.” The effect is that, for the many hours I watched the Los Angeles Valiant play scrims, as I was dutifully taking notes and thinking earnestly about how this might be the future of sports, every few minutes this whole pack of teenage boys would suddenly burst out shouting, “Monkey monkey monkey monkey!”

      Overwatch super fan Joe Silvoso as the defensive hero Junkrat.

      Damon Casarez

      In late September, three months before the league’s first regular-season game and a mere 60-some days from the start of preseason play, Disalvo shakes his head in disbelief at the prospect of playing for the Los Angeles Valiant. “It feels like I’m part of something that’s going to be big, like very big,” he says. “There’s going to be billboards? I’m gonna be representing a city like Los Angeles? Like … what? That’s crazy.”

      It’s especially crazy given that he didn’t actually move to LA to join the Valiant. His first professional esports contract, the one that achieved peace with his mother, actually came from an organization called the Immortals, one of the independent esports brands, known as endemics, that field teams in a number of different video­games. (The Immortals, for example, have teams that play Counter-Strike: Global Offensive and League of Legends, among others.) Endemic teams have been in esports for a long time and have been essential to its growth. They’re well known within gaming circles, but they are not billion-­dollar organizations like Blizzard or the New England Patriots, and thus they are not able to be as generous with their players.

      Jake Lyon, a 21-year-old from San Diego whose screen name is the refreshingly straightforward “JAKE,” is one of the best damage-dealers in Overwatch. He earned about $2,000 a month as a member of an endemic called Luminosity Gaming—that is, until the Luminosity Overwatch roster disbanded in mid-2017, as Blizzard began consolidating control over professional Overwatch play. “In the past there’s been no security in an esports contract,” he says. “Even though we were signed to a two-year contract with Luminosity, there’s always a clause—and it’s not just them, every single esports contract looks like this—that says they can buy you out for one month’s salary. When they decide it’s your last month: goodbye.”

      Lyon went on to sign with the Overwatch League’s Houston Outlaws, and he says the new league is a “huge improvement.” Contracts are guaranteed for at least a year, after which the team will have a second-year option with a prenegotiated salary. And, critically, players cannot be fired during the length of their contract, unless they’re guilty of something that would get them fired from any job.

      Players are provided with housing, health insurance, a retirement plan, and a minimum league salary of $50,000, though Lyon believes that most players who are among a team’s starting six will earn much more than that. (Most teams also have a few backup players.) Plus, there’s revenue sharing and a prize pool of $3.5 million for successful teams, $1 million of which is reserved for the inaugural season’s eventual champions.

      When he signed his contract with Houston, Lyon sat at his computer clicking his e-signature to the document’s relevant places, and he realized how different it was from what had come before. “Maybe this could be the way esports is going forward,” he says. “That it can be a legitimate career, and that it’s not like someone is going all-in on some fragment of a dream.”

      Inside Blizzard arena, three enormous L.E.D. screens, approximately 20 feet by 11, show the audience the in-game action and player reactions.

      Damon Casarez

      It's hard not to notice that, as of this writing, there are no women on any of the rosters of any of the 12 teams in Overwatch League. “They are all dudes,” Nanzer says, shaking his head. It’s something he’s been thinking a lot about, and he admits that part of the problem is cultural. Gaming can be seen as acceptable and normal behavior for boys, but not necessarily for girls. (Though many studies show that roughly equal numbers of men and women play videogames casually, competitive play remains overwhelmingly male.) “There was never a question that I was going to sit and play games with my son,” he said. “But then the other day my daughter asked me, ‘Can I play Overwatch too?’ and I was like, oh shit, I gotta be better about this. I gotta treat it equal.”

      And the women who do play Overwatch often find themselves to be targets of harassment. Glisa is the screen name for a 19-year-old Overwatch player who lives in Portland, Oregon. Despite being busy with her college studies, Glisa is one of the top 100 Overwatch players in terms of time spent in the game. She has so far logged thousands of hours of gameplay, and she keeps a YouTube channel with highlight reels. But sometimes she posts videos of her interactions with other gamers. She uploaded a montage recently called “Online Gaming as a Girl.”

      “That was spawned after I had several different, very toxic encounters with people who brought up the fact that I was female many times and tried to use that to degrade me,” she says.

      This will sound familiar to anyone who has followed the horrors of Gamergate over the past few years, and the video is hard to watch. The gamers she encounters aren’t just being a little insensitive—they are straight-up knuckle-dragging misogynists:

      “You’re such a bimbo.”

      “You’re probably ugly.”

      “Grab her by the pussy.”

      “Women’s rights are a fucking joke.”

      And on and on and on.

      “The internet is a very angry place,” Glisa says. After posting the video, she received emails and comments from people criticizing her “for not being able to deal with it, for being weak, for finding this upsetting.”

      She was also contacted by other female Overwatch players who’d had similar run-ins. “Other women who were like, this is why I don’t join voice chat and never talk to people; this is why I use a male-style username. And that’s what upsets me the most. I don’t feel like people should have to hide who they are to be able to feel safe.” (Glisa didn’t want to use her real name for this article. She says she’s going to be applying for jobs soon, and if potential employers ­Google her, she doesn’t want them to think she’s someone who complains about sexual harassment. Which sort of proves her point.)

      I ask her how it made her feel that something she loves can also be so hurtful. “Disappointed,” she says, “in life, in the universe, for being this way. Sometimes it affects me a lot more, and I leave the voice channel so I don’t have to deal with it. There are days that are just a lot harder than other days, and I try to insulate myself more from the anger.”

      The sheer number of variables in play seems to exceed the human brain’s abilities.

      Overwatch executives are quick to point out there’s a system in place for players to report toxic behavior, and hundreds of thousands of accounts have been disciplined for the type of harassment that Glisa describes. (She reported each of the players who harassed her, but she is not sure whether they received suspensions or bans. The system needs work.) Still, the problem persists, and if Overwatch is a game that requires constant communication between players, and women are made to feel uncomfortable communicating within the game, then perhaps it’s clear why few of them go pro.

      Ysabel Müller is an Overwatch player who lives in Rodenbach, Germany. She began playing the game while it was still in beta, and she became highly ranked and friendly with a lot of the pros she played with. She says she had designs on going pro herself but found that getting useful feedback from her teammates was difficult. They treated her, she says, like she couldn’t endure criticism—that if criticized she would be offended and accuse her teammates of sexism and get them kicked out of the game.

      “That’s a big fear of some of the male players, and so they’d rather distance themselves,” she says. She didn’t ultimately go pro in Overwatch. Instead, she helped organize regional tournaments. She’s now sending out applications to Overwatch League teams, hoping for a job in team management and player relations.

      “I think it will change over the years, once more female players come in and it gets more accepted,” she says.

      Blizzard seems to be trying to solve this problem from within. Kim Phan, Blizzard’s director of esports operations, says the company has been proactive in hiring women, including for key on-air shoutcaster jobs, which she hopes will promote female involvement in esports.

      And while she says these kinds of visible women role models are essential, Phan also stressed the importance of men advocating and supporting women in gaming.

      “Having mentors, advisers, who are men is very impactful,” she says. “It gives you the courage to stay because you know that the toxic voice is just one among many other voices. It’s a reminder that not everyone is like that.”

      When asked what the Overwatch League was doing to attract more female players, nobody at Blizzard could point to any specific outreach or recruiting efforts. Nanzer says he’s been looking at data from women-only sports leagues like the WNBA that suggest a women’s league would bring more women into the game. “The idea comes up all the time: Should we have a women’s-only tournament or league?” he says. “I think there’s a way to do that where it’s awesome and supportive and grows the sport. I think there is a way to do it where it’s actually detrimental and it makes it seem like, oh, you’re not as good as men. We kind of go back and forth on that.”

      Back in Redondo Beach, the early evening sunlight is streaking in through gaps in the curtains as the Los Angeles Valiant begins its last scrim of the day. Tonight’s match is against another Overwatch League team, the San Francisco Shock, which recently made headlines by signing superstar damage-dealer Jay “sinatraa” Won for a rumored $150,000 a year.

      And while I’m still a noob at Overwatch, even I can tell that this San Francisco team plays with an unusual intensity. “They’re a team of 17-year-olds who just do not stop,” says Coxall, the Valiant coach, making the Shock sound young and insane as opposed to the Valiant’s qualities of wisdom and tactics. “If you think you’ve won a fight, you haven’t,” he tells the team. “These guys will keep throwing themselves at you. And one of them will clutch. Always expect that.”

      I ask him about that word, “clutch,” and he explains that it refers to someone overcoming dubious odds to win. In other words, the Shock’s strategy is not necessarily to maneuver as a team but rather to have their players engage in seemingly suicidal encounters and trust that they have the skill to pull it off. It’s unrelenting, high-intensity pressure designed to fluster opponents.

      It’s a reminder that this is truly a young person’s game—not just in its audience but also in its players. When I asked Christopher Schaefer, aka Grim, how long he thought he’d be a pro, he didn’t have high hopes. “Normally you can compete until you’re about 25,” he says. “Right now, up until when I’m around 21, 22-ish, I’m going to be the sharpest. But as soon you hit 25, your reaction speeds are going to slow down.”

      Stefano Disalvo said the same thing: “How long do I think I’ll play? I say maybe four years, five years.”

      When he decided to become an esports professional, Disalvo did not know that Overwatch League would exist. He committed to going pro during a time when the pay was uncertain and there was no job security, despite knowing that it would last only five years max.

      Which seems just astonishingly irrational. What drove him to do it? “I saw everybody doing the norm: college, university, major in something,” he says. “But I didn’t want to do that. I wanted to do something more because I felt like I wanted to prove something. I don’t know. It felt like this thing that I had to prove.”

      Which makes sense to me. That, yes, for the people who go pro in esports, there’s a certain happiness in playing videogames for a living. But maybe more than that, esports allows people an avenue to do something different, to be special. Like musicians or actors or writers pursuing an unlikely dream, it strikes me as both romantic and brave.

      Meanwhile, to try to absorb the Shock’s frantic offense, the Valiant team has figured out a new strategy. They go with a hero lineup that’s bigger—more tanks, more health.

      “Niiiiiiice,” comes a chorus from around the room when they finally win a round.

      “There you go, boys,” Coxall says into his headset’s microphone. “You took control. ”

      The sun has gone down, but nobody seems to have noticed. By the end of the last scrim of the day, they are playing in the dark.


      Nathan Hill (@nathanreads) is the author of The Nix. This is his first piece for WIRED.

      This article appears in the January issue. Subscribe now.

      Read more: https://www.wired.com/story/overwatch-videogame-league-aims-to-become-new-nfl/

      Facebook for 6-Year-Olds? Welcome to Messenger Kids

      Facebook says it built Messenger Kids, a new version of its popular communications app with parental controls, to help safeguard pre-teens who may be using unauthorized and unsupervised social-media accounts. Critics think Facebook is targeting children as young as 6 to hook them on its services.

      Facebook’s goal is to “push down the age” of when it’s acceptable for kids to be on social media, says Josh Golin, executive director of Campaign for a Commercial Free Childhood. Golin says 11-to-12-year-olds who already have a Facebook account, probably because they lied about their age, might find the animated emojis and GIFs of Messenger Kids “too babyish,” and are unlikely to convert to the new app.

      Facebook launched Messenger Kids for 6-to-12-year olds in the US Monday, saying it took extraordinary care and precautions. The company said its 100-person team building apps for teens and kids consulted with parent groups, advocates, and childhood-development experts during the 18-month development process and the app reflects their concerns. Parents download Messenger Kids on their child’s account, after verifying their identity by logging into Facebook. Since kids cannot be found in search, parents must initiate and respond to friend requests.

      Facebook says Messenger Kids will not display ads, nor collect data on kids for advertising purposes. Kids’ accounts will not automatically be rolled into Facebook accounts once they turn 13.

      Nonetheless, advocates focused on marketing to children expressed concerns. The company will collect the content of children’s messages, photos they send, what features they use on the app, and information about the device they use. Facebook says it will use this information to improve the app and will share the information “within the family of companies that are part of Facebook,” and outside companies that provide customer support, analysis, and technical infrastructure.

      “It’s all that squishy language that we normally see in privacy policies,” says Golin. “It seems to give Facebook a lot of wiggle room to share this information.” He says Facebook should be clearer about the outsiders with which it may share data.

      In response to questions from WIRED, a spokesperson for Facebook said: “It’s important to remember that Messenger Kids does not have ads and we don’t use the data for advertising. This provision about sharing information with vendors from the privacy policy is for things like providing infrastructure to deliver messages.”

      Kristen Strader, campaign coordinator for the nonprofit group Public Citizen, says Facebook has proven it cannot be trusted with youth data in the past, pointing to a leaked Facebook report from May that promised advertisers the ability to track teen emotions, such as insecurity, in real-time. "Their response was just that they will not do similar experiments in the future," says Strader. At the time, advocacy groups asked for a copy of the report, but Facebook declined.

      On Thursday, Sen. Richard Blumenthal and Sen. Ed Markey sent a long list of questions about the app's privacy controls to Mark Zuckerberg. "We remain concerned about where sensitive information collected through this app could end up and for what purpose it could be used," they wrote in a letter to the Facebook CEO.

      Tech companies have made a much more aggressive push into targeting younger users, a strategy that began in earnest in 2015 when Google launched YouTube Kids, which includes advertising. Parents create an account for their child through Google’s Family Link, a product to help parents monitor screentime. FamilyLink is also used for parents who want to start an account for their kid on Google Home, which gets matched to their child’s voice.

      “There is no way a company can really close its doors to kids anymore,” says Jeffrey Chester, executive director for the Center of Digital Democracy. “By openly commercializing young children’s digital media use, Google has lowered the bar,” he says, pointing to what toy company Mattel described as “an eight-figure deal” that it signed with YouTube in August.

      Chester says services such as YouTube Kids and Messenger Kids are designed to capture the attention, and affinity, of the youngest users. “If they are weaned on Google and Facebook, you have socialized them to use your service when they become an adult,” he says. “On the one hand it’s diabolical and on the other hand it’s how corporations work.”

      In past years, tech companies avoided targeting younger users because of the Children’s Online Privacy Protection ACT (COPPA), a law that requires parental permission in order to collect data on children under 13. But, “the weakness of COPPA is that you can do a lot of things if you get parental permission,” says Golin. In the past six months, new apps have launched marketed as parent helpers. “What they’re saying is this is great way for parents to have control, what they are getting is parental permission,” says Golin.

      Several children-focused nonprofit groups endorsed Facebook’s approach, including ConnectSafely and Family Online Safety Institute (FOSI). Both groups have received funding from Facebook and each has at least one representative on Facebook’s 13-person advisory board for Messenger Kids. The board also includes two representatives from MediaSmarts, which is sponsored by Facebook.

      A Facebook spokesperson says, “We have long-standing relationships with some of these groups and we’ve been transparent about those relationships.” The spokesperson says many backers of Facebook’s approach, including Kristelle Lavallee of the Center on Media and Child Health, and Dr. Kevin Clark of George Mason University’s Center for Digital Media Innovation and Diversity, do not receive support from Facebook.

      UPDATE 3:25 PM: This story has been updated with information about the advisory board for Messenger Kids.

      UPDATE 4:25 PM 12/7/2017: This story has been updated with information about Sen. Blumenthal's and Sen. Markey's letter to Mark Zuckerberg.

      Read more: https://www.wired.com/story/facebook-for-6-year-olds-welcome-to-messenger-kids/

      Worried About Robots Taking Your Job? Learn Spreadsheets

      Musing on the future of the economy earlier this year, Bill Gates warned of smart machines replacing human workers and suggested a tax on robots. A new study of how technology is changing American jobs suggests workers are most immediately challenged by more common technology that Gates himself bears much responsibility for, such as Microsoft Office.

      The new study from the Brookings Institution used government data on work tasks to track how use of digital tools changed in a wide range of occupations between 2002 and 2016. Use of digital technology, such as computers and spreadsheets, became more important to occupations of all kinds. But the most dramatic changes were felt in jobs traditionally least reliant on technology skills—think of home health aides and truck mechanics using computers to diagnose problems or record their work.

      The Brookings’ study created a “digitalization” score for 545 occupations covering 90 percent of the economy, using government survey data that asks workers about their knowledge of computers, and how much they use them. In 2002, 56 percent of jobs scored low on Brookings’ digitalization scale; by 2016, only 30 percent did. Nearly two-thirds of new jobs created since 2010 required high or medium digital skills, the report says. That shift is problematic given America’s long-established deficit in basic digital skills, such as familiarity with spreadsheets or other workplace software, where US workers score well below other those from other advanced economies.

      Share of US jobs by degree of digital content. Source: Brookings Institution

      HOTLITTLEPOTATO

      Overall, the Brookings report suggests the window of opportunity for workers without basic digital skills or a college degree is closing. “With the availability of jobs that require no to very low digital skills dwindling, economic inclusion is now contingent on digital readiness among workers,” says Mark Muro, a senior fellow at Brookings who led the study. “While tech empowers it also polarizes.” He recommends that companies, government officials, and educational groups invest in programs that train workers in basic digital workplace tools.

      That diagnosis and proposed remedy stand in contrast to two common prescriptions for how to help the US economy adapt to technological change. Gates and many other tech executives suggest new government programs to support workers displaced by a coming generation of smart robots. In recent years there has been a swell of support, including from the Obama administration, for programs that teach people to code.

      The new Brookings data suggests the US faces a more immediate, and perhaps less glamorous task. “Coding for all is not quite the right model,” says Muro. “It’s less sexy, but we need much broader exposure and mastery of humbler, everyday software.” Maybe not everyone needs to be a code slinger, but word processing and enterprise packages like Salesforce are hard to avoid.

      Google CEO Sundar Pichai made a similar argument last month, when he launched a $1 billion educational program focused on helping workers skill up in workplace technology. Google employees will offer training in cities around the US. Naturally, they’ll highlight products such as GSuite, Google’s competitor to Microsoft office.

      The digital-skills crunch has been a long time brewing. Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy, says that IT’s impact on US businesses surged in the mid-to-late ’90s—not coincidentally around the same time US median wages began to stagnate. In 1996, President Clinton announced a “national mission” to make all US children technologically literate by 21st Century. The Brookings report shows there is still a way to go. “We could have done a lot better,” says Brynjolfsson.

      Brynjolfsson echoes Muro’s call for better educational efforts to widen the pool of workers with basic digital skills. He also says society’s poor track record at adjusting to the digital age shows we should be starting now to prepare workers for the next big shift, in which machines become capable of many tasks now done by humans. He recommends that, in addition to productivity software and coding skills, workers should be encouraged to develop their creativity and emotional intelligence—faculties believed to be among the toughest for software to acquire.

      Jason Kloth, CEO of Ascend Indiana, an industry-led group that tries to improve workforce skills, generally agrees with Brynjolfsson’s long-term predictions that advanced automation will challenge workers of all kinds. But his organization has more immediate concerns. “We need to close the gap between demand and supply in the labor market today,” he says.

      Ascend has collaborated with Brookings on research on workplace skills. The Indianapolis group’s initiative includes programs that help companies identify or create educational programs for workers. Kloth says he feels there’s more at stake than just the fortunes of local companies and workers. “I think that growing income inequality manifests in social and political unrest,” Kloth says. Spreadsheet training could—maybe should—be a political issue.

      Read more: https://www.wired.com/story/worried-about-robots-taking-your-job-learn-spreadsheets/

      Should the Upper Middle Class Take the Biggest Tax Hit?

      Humans learn the concept of fairness at a very young age. After all, it doesn’t take long for a child to start whining about a sibling who gets an extra serving of ice cream. As the Republican-controlled Congress tries to push through tax reform this year, one group of Americans may similarly question why it’s coming up a scoop short.

      The upper middle class gets relatively few benefits and a disproportionate number of tax hikes under the $1.4-trillion Tax Cuts and Jobs Act approved by the U.S. House of Representatives last week. Families earning between $150,000 and $308,000—the 80th to 95th percentile—would still get a tax cut on average. But by 2027, more than a third of those affluent Americans can expect a tax increase, according to the Tax Policy Center.

      If the House bill becomes law, overall benefits for the upper middle class will start out small, and later vanish almost entirely.

      Is this fair? Some argue it’s only right for the upper middle class to carry a heavier burden. This is because the top fifth of the U.S. by income has done pretty well over the past three decades while the wages and wealth of typical workers have stagnated. People in the 81st to 99th percentiles by income have boosted their inflation-adjusted pre-tax cash flow by 65 percent between 1979 and 2013, according to the Congressional Budget Office. That’s more than twice as much as the income rise seen by the middle 60 percent. (The top 1 percent, meanwhile, saw their income rise by 186 percent over the same period, but that’s another story.)

      “Many upper-middle-class families will tell you they do not feel wealthy,” said Brian Riedl, a senior fellow at the Manhattan Institute, a right-leaning think tank. “Their standard of living [is] closer to the middle class than to the top 1 percent.” The income numbers don’t tell the whole story, he explained. The upper middle class is weighed down by high costs: Affluent workers live in expensive areas, pay a lot for real estate and daycare, and are taxed far more than Americans further down the ladder.

      Richard Reeves, a senior fellow at the left-leaning Brookings Institution, isn’t buying that argument. He’s the author of “Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It.”

      “There’s a culture of entitlement at the top of U.S. society,” Reeves said. While others focus on rising wealth of the top 1 percent, Reeves argues that the gap is widening between the top 20 percent and everyone else. The upper middle class is guilty of “hoarding” its privileges, using its power to skew the job market, educational institutions, real estate markets, and tax policy for its own benefit, he contends.

      “The American upper middle class know how to take care of themselves,” Reeves said during a presentation at the City University of New York last week. “They know how to organize. They’re numerous enough to be a serious voting bloc, and they run everything.”

      So by his measure, the tax legislation’s disproportionate hit to the upper middle class is indeed fair.

      A family earning $240,000 a year is bringing in four times the U.S. median household income of $59,000, according to the U.S. Census Bureau. All that money, along with the upper middle class’s political power, buys some huge advantages, Reeves said. For example, affluent parents compete for access to the best schools, bidding up home values in the best school districts. Then, they use zoning rules to prevent new construction, keep property values high, and prevent lower-income Americans from moving in. In the process, children of this demographic end up at the most prestigious universities, nab the best internships and jobs, and ultimately join their parents at the top of U.S. society. 

      The very existence of the House tax bill rebuts Reeves’s argument that the upper middle class is in a position to manipulate Washington. (The Senate is considering its own tax legislation, which differs from the House bill in several ways.) Compared with middle class Americans, the upper middle class is less likely to see marginal tax rates fall under the House legislation. The bill also limits or scraps entirely some of the group’s favorite tax breaks, especially deductions for state-and-local taxes, and medical expenses, and tax breaks for education.

      If you’re part of the upper middle class and concede you should be paying more, don’t count on wealthier groups making the same sacrifice—at least under the House bill. 

      While a repeal of the alternative-minimum tax helps some people with incomes below $300,000, it’s more likely to benefit those on the higher wealth rungs. The very rich, including President Donald Trump, who has been pressing for a legislative victory before the end of his first year in office, would benefit from a repeal of the estate tax, lower corporate tax rates and a lower “pass-through” rate on business income. The House bill explicitly tries to limit the pass-through benefit for doctors, lawyers, accountants, and other high-earning professionals—traditional denizens of the upper middle class. 

      This all may seem terribly unfair to members of the upper middle class, but there are some provisions they can take solace in. The bill leaves untouched some sweet tax breaks that predominately benefit people with lower six-figure salaries, such as 529 college savings plans and 401(k)s and other retirement perks. The CBO calculates that two-thirds of the government’s costs for retirement tax breaks go to the top 20 percent.

      But beyond these few exceptions, much of the upper middle class will still take it on the chin.

      And maybe they should. Higher taxes on the upper middle class make sense to some liberal tax experts—but only if the proceeds are used the right way, they said, for things like better health care, more affordable college, and rebuilding infrastructure. Under the House bill, though, any new tax revenue is used to offset tax cuts—much of which will benefit the super wealthy and corporations, especially over time.

      “There would be a lot of people in the country who would be willing to chip in for those goals,” said Carl Davis, research director of the left-leaning Institute on Taxation and Economic Policy. In the House plan, however, the upper middle class is “going to pay more for a bill that’s going to grow the national debt, and provide the lion’s share of the benefits to corporations and their shareholders.”

      Riedl, who has advised Republican candidates, argues the upper middle class should get a more generous tax cut under GOP tax reform. “It’s hard to argue the upper middle class is not currently paying its fair share,” he said. Reeves said the U.S. should ultimately tax the upper middle class more—but “the top 5 percent more still.”

      Looking at Republican tax plans, Reeves said, “it’s like they only read half my book.”

        Read more: http://www.bloomberg.com/news/articles/2017-11-20/should-the-upper-middle-class-take-the-biggest-tax-hit

        Mapping the Future: Cartography Stages a Comeback

        Cartography is the new code. Increasingly, everything from your takeout delivery to your UberPool route is orchestrated not just by engineers but by cartographers. Between 2007 and 2015, the number of grads earning master’s degrees in cartography increased annually by more than 40 percent on average. And as advanced satellites, digital mapping tools, and open-source geographical software progress, the demand for cartographers is projected to grow nearly 30 percent by 2024.

        Modern cartographers are as much data analysts as they are map producers. Flagship GIS systems by software companies like Esri have been democratized by an explosion of open-source alternatives like Carto and MapBox. “We are absolutely inundated with volumes of geospatial data,” says Mike Tischler, director of the US Geological Survey’s National Geospatial Program, “but with no means to effectively use it all.”

        Which is why, as tasks from house-hunting to solving public-health crises depend on sophisticated map integration, cartography grads are being snapped up by Silicon Valley. “Ten years ago someone with geospatial expertise may have been siloed from the engineering team,” says Grubhub CTO Maria Belousova. “Today a huge portion of our team works on spatial search and route optimization.” Data-savvy mappers are charting that digital frontier.


        This article appears in the November issue. Subscribe now.

        Read more: https://www.wired.com/story/mapping-the-future-cartography-stages-a-comeback/

        Free Money: The Surprising Effects of a Basic Income Supplied by Government

        Skooter McCoy was 20 years old when his wife, Michelle, gave birth to their first child, a son named Spencer. It was 1996, and McCoy was living in the tiny town of Cherokee, North Carolina, attending Western Carolina University on a football scholarship. He was the first member of his family to go to college.

        McCoy’s father had ruined his body as a miner, digging tunnels underneath lakes and riverbeds, and his son had developed a faith that college would lead him in a better direction. So McCoy was determined to stay in school when Spencer came along. Between fatherhood, football practice, and classes, though, he couldn’t squeeze in much part-time work. Michelle had taken an entry-level job as a teacher’s aide at a local childcare center right out of high school, but her salary wasn’t enough to support the three of them.

        Then the casino money came.

        Just months before Spencer was born, the Eastern Band of Cherokee Indians opened a casino near McCoy’s home, and promised every one of its roughly 15,000 tribal members—among them Skooter and Michelle—an equal cut of the profits. The first payouts came to $595 each—a nice little bonus, McCoy says, just for being. “That was the first time we ever took a vacation,” McCoy remembers. “We went to Myrtle Beach.”

        Once Spencer arrived, the checks covered the family’s car payments and other bills. “It was huge,” McCoy says. He graduated college and went on to coach football at the local high school for 11 years. Two decades later, McCoy still sets aside some of the money the tribe gives out twice a year to take his children—three of them, now—on vacation. (He and Michelle are separated.) And as the casino revenue has grown, so have the checks. In 2016, every tribal member received roughly $12,000. McCoy’s kids, and all children in the community, have been accruing payments since the day they were born. The tribe sets the money aside and invests it, so the children cash out a substantial nest egg when they’re 18. When Spencer’s 18th birthday came three years ago, his so-called “minor’s fund” amounted to $105,000 after taxes. His 12-year-old sister is projected to receive roughly twice that.

        Skooter McCoy, 41, got his first casino payout when he was 20. A former high school football coach, McCoy now runs the local Boys’ Club.
        Yael Malka for WIRED
        In 2006, McCoy won the Frell Owl Award for contributions to the welfare of Cherokee children and families. He displays it on his desk at the Boys’ Club.
        Yael Malka for WIRED

        McCoy is now general manager of the Cherokee Boys Club, a nonprofit that provides day care, foster care, and other services to the tribe. At 41, he has a shaved head and wears a gray Under Armour T-shirt over his sturdy frame, along with a rubber bracelet around his wrist that reads, “I can do all things through Christ who strengthens me.”

        The casino money made it possible for him to support his young family, but the money his children will receive is potentially life-altering on a different scale. “If you’ve lived in a small rural community and never saw anybody leave, never saw anyone with a white-collar job or leading any organization, you always kind of keep your mindset right here,” he says, forming a little circle with his hands in front of his face. “Our kids today? The kids at the high school?” He throws his arms out wide. “They believe the sky’s the limit. It’s really changed the entire mindset of the community these past 20 years.”

        These biannual, unconditional cash disbursements go by different names among the members of the tribe. Officially, they’re called “per capita payments.” McCoy’s kids call it their “big money.” But a certain kind of Silicon Valley idealist might call it something else: a universal basic income.

        The idea is not exactly new—Thomas Paine proposed a form of basic income back in 1797—but in this country, aside from Social Security and Medicare, most government payouts are based on individual need rather than simply citizenship. Lately, however, tech leaders, including Facebook founders Mark Zuckerberg and Chris Hughes, Tesla’s Elon Musk, and Y Combinator president Sam Altman, have begun pushing the concept as a potential solution to the economic anxiety brought on by automation and globalization—anxiety the tech industry has played its own role in creating.

        If robots and offshoring take all the jobs, or at the very least displace the low-skilled ones, the thinking goes, there may come a time when there simply aren’t enough jobs to go around. What then? In the aftermath of Donald Trump’s election, which some have attributed to this very tension, questions about how to support the so-called working class have only grown. Politicians have latched on too. In her new book, What Happened, Hillary Clinton writes that she considered rolling out a basic income policy during her 2016 campaign. In September, Silicon Valley congressperson Ro Khanna introduced a bill calling for a $1.4 trillion expansion of the earned income tax credit, which would effectively create a small basic income for low-income working people via tax credits. And the mayor of Stockton, California, recently announced that beginning in August 2018, the city plans to give some of its 300,000 citizens $500 a month, an experiment being funded by Hughes’s organization, the Economic Security Project.

        The Eastern Band of Cherokee isn’t the only group whose members get unconditional cash: The Alaska Permanent Fund has been giving $1,000 to $2,000 a year to its citizens for decades, and other Native American tribes have also divided up casino revenues. But the Cherokee example is among the most researched. Back in the 1990s, scholars at Duke were studying the mental health of Cherokee children in the region; then the casino was built, creating the conditions for a natural experiment. Three decades of longitudinal research backs up McCoy’s anecdotal evidence that the money has had profound positive effects.

        As the richest people in America fixate on how to give money to the poorest, the Cherokee program is a case study of whether a basic income is in fact a practical proposal for alleviating economic inequality or just another oversimplified, undercooked Silicon Valley fix to one of the most intractable problems our society faces. Or maybe it’s both.

        The biannual payments to every Cherokee tribal member comes from the profits from the Harrah’s casino.
        Yael Malka for WIRED

        The Qualla Boundary, a 56,000-acre tract in western North Carolina, is the designated home of the Eastern Band of Cherokee, who have lived in the region for hundreds of years. The landscape is beautiful but dotted with signs of neglect. Along the stretch of road that spirals its way through the majestic, fog-capped Blue Ridge Mountains, each hairpin curve reveals a single-story motel, ramshackle gas station, or abandoned barbecue stand. Mobile homes sit idly along the roadside accumulating rust. Although the land is held in trust for the Cherokee, many white people, especially poor whites, live there too. The median household incomes in the counties of the Qualla fall well below the national figure. In Swain County, where the Boys’ Club is based, 24 percent of people live below the poverty line, about 12 percent higher than the national median.

        Asheville, with its craft breweries and art galleries, is about an hour’s drive east of the town of Cherokee. “Downtown” in Cherokee refers to a mile-long section of Tsali Boulevard lined with log cabin souvenir shops that hawk handwoven baskets and black bear figurines made in China.

        It was here, in the quiet shadow of the mountain range, that a team of researchers including Jane Costello, a professor of psychiatry and behavioral sciences at the Duke Institute for Brain Sciences, decided to ground the Great Smoky Mountains Study of Youth. Costello wanted to find out about the need for mental health and psychiatric services for children in rural America, and in 1993 the researchers began studying 1,420 children, 350 of whom were members of the Eastern Band of Cherokee Indians. They divided the group into three age cohorts—9-year-olds, 11-year-olds, and 13-year-olds—and gave their parents thick, detailed personality surveys called the Child and Adolescent Psychiatric Assessment, which were completed every year until the kids turned 16 and then again every few years until they turned 30. Looking for indicators of behavioral or emotional troubles, the researchers asked questions about whether the children ever engaged in physical fights and whether they had trouble being away from home.

        Costello and her team also recorded household data like parents’ occupations, history of domestic violence, and, crucially, income. When the study began, about 67 percent of the American Indian kids were living below the poverty line. It wasn’t until after the casino opened that Costello began to notice that household income among the Cherokee families was going up. It was subtle at first, but the trend turned sharply upward as time went on, eventually lifting 14 percent of the Cherokee children in the study above the poverty line. Household income for those families who were not Cherokee, meanwhile, grew at a slower rate.

        It was an awakening for Costello, who had accidentally stumbled onto an entirely new line of inquiry on the impact of unconditional cash transfers on the poor. “I suddenly thought, ‘Oh my god,’” Costello remembers.

        Research showed that when the Cherokee families started receiving regular cash payments, children were mentally healthier and stayed in school longer.
        Yael Malka for WIRED

        In 1995, the tribe opened its first casino, a controversial decision among locals, who worried that gambling might attract unsavory characters to the area. It was Joyce Dugan, the tribe’s only female chief and a former teacher, who suggested that if the tribe were to benefit from its new casino, then every one of its members ought to get a cut too. The tribal council agreed.

        The casino started as a glorified arcade, filled with electronic poker and bingo machines, but it has now grown into the 21-story Harrah’s Cherokee Casino. All glass and stone, it juts out of the earth like one of the mountain’s many towering peaks. Inside, the casino floor is dotted with thick pillars, designed to look like giant trees, a reminder that the great outdoors is just beyond the cigarette smoke and zombie-themed slot machines.

        Harrah’s, which operates the casino, takes 3 percent of the $300 million annual profits. The bulk is funneled back into the community, covering infrastructure, health care for every tribal member, and the college education fund. Casino funds have paved roads and paid for a new $26 million wastewater treatment plant. Half of the profits go toward the per capita payments. The casino has become the tribe’s most precious resource.

        The Eastern Band’s change in fortunes also shifted the course of Costello’s research. “We thought it’d be interesting to see if it made any difference” to the children’s mental health, she says. They also started comparing the younger Cherokee children, whose families started accruing money earlier in their lives, to the older ones. They wanted to answer a simple question: Would the cash infusion benefit these kids in measurable ways?

        The answer defied Costello’s initial hypothesis. “I thought, ‘There’s such a pit of poverty there that this isn’t going to make any difference; it’s trivial,’” she remembers. “But it wasn’t.” Now the body of research that she and other academics have built has become a favorite point of reference for universal basic income advocates, providing some of the most compelling evidence yet of the positive effects of bestowing unconditional sums of cash on the poor.

        In two studies, one published in 2003 and a follow-up in 2010, Costello compared children who were lifted out of poverty after the casino opened to those who had never been poor. She scored them based on the presence of what researchers referred to as emotional disorders, like depression and anxiety, as well as behavioral disorders, including attention deficit hyperactivity disorder (ADHD).

        Before the casino opened, Costello found that poor children scored twice as high as those who were not poor for symptoms of psychiatric disorders. But after the casino opened, the children whose families’ income rose above the poverty rate showed a 40 percent decrease in behavioral problems. Just four years after the casino opened, they were, behaviorally at least, no different from the kids who had never been poor at all. By the time the youngest cohort of children was at least 21, she found something else: The younger the Cherokee children were when the casino opened, the better they fared compared to the older Cherokee children and to rural whites. This was true for emotional and behavioral problems as well as drug and alcohol addiction.

        Other researchers have used Costello’s data to look at different effects of the casino payments. One fear about basic income is that people will be content living on their subsidies and stop working. But a 2010 analysis of the data, led by Randall Akee, who researches public policy at UCLA's Luskin School of Public Affairs, found no impact on overall labor participation.

        Of course, the casino also brought jobs to the area, and the majority of the roughly 2,500 people the casino employs are tribal members. This would seem to confound the question of whether the tribal payment or casino income made the difference in the children’s lives, but Akee looked into this too. He found that, among the parents in Costello’s study, employment didn’t go up or down after the opening of the casino.

        Akee also looked at the effects of the money on education and found that more money in the household meant children stayed in school longer. The impact on crime was just as profound: A $4,000 increase in household income reduced the poorest kids’ chances of committing a minor crime by 22 percent.

        All of this amounted to substantial financial benefits for the community as a whole. “This translates to fewer kids in jail, fewer kids in in-patient care,” Costello says. “Then there are the other costs you can’t calculate. The cost of people not killing themselves? That’s a hard one.”

        Costello has been at the center of the research showing the effects of the casino payments, but during all the time in Qualla Boundary she says she had never even heard the term basic income. That is, until she started getting phone calls from people who were interested in the topic. People like Chris Hughes.

        The main drag in Cherokee is lined with log cabin souvenir shops that hawk handwoven baskets and black bear figurines made in China.
        Yael Malka for WIRED
        Visitors to the town are greeted by a giant sculpture of a Cherokee warrior.
        Yael Malka for WIRED

        Hughes grew up about a three-hour drive from Cherokee, in Hickory, North Carolina, where his mother worked as a public school teacher and his father was a traveling paper salesman. But that’s not what attracted Hughes to Costello’s work. He was interested in basic income primarily because at just 33 years old, Facebook has made him filthy rich—he’s worth roughly $430 million—and he’s still grappling with how, exactly, that happened 1.

        “I’m proud of the work we did at Facebook, but I’ve also been very clear that the financial rewards I got were disproportionate to the work we put in,” Hughes says. He’s sitting cross-legged in a leather chair inside NeueHouse, a Manhattan warehouse that’s been converted into a swanky coworking space (top-tier membership costs $3,500 a month). “In human history, you have not had self-made wealth among twentysomethings on the order of magnitude we have today,” Hughes continues. “What’s making that possible? Because whatever it is, is happening at the same time median household wages have barely budged.”

        It’s true. Since 1980, average income for the top .01 percent of Americans has more than tripled. For the bottom 90 percent, it’s basically flat-lined. Hughes is among those who view the disparity as a national crisis. And so he recently launched the Economic Security Project, a two-year effort to invest $10 million from Hughes and others into research on universal basic income.

        This investment comes amid a sudden wave of interest in universal basic income in the tech industry. Y Combinator, the Palo Alto–based startup accelerator, announced in early 2016 that it was starting its own basic income experiment in which a small number of Oakland residents would receive a cash payment and be compared to a control group. Tesla’s Elon Musk, meanwhile, has warned about the rise of the robots, arguing at the World Government Summit earlier this year that a basic income is “going to be necessary.” And when Mark Zuckerberg delivered his commencement speech at Harvard in May, he advocated for a basic income, saying it would provide people with “a cushion to try new ideas."

        According to Ro Khanna, who represents California’s 17th congressional district in the heart of Silicon Valley, the 2016 election woke techies up to the country’s glaring economic inequality. “They don’t want a populist backlash,” he says. “They don’t want a country divided by place.”

        Hughes called Costello while he was looking for basic income studies that the Economic Security Project might like to finance. The goal of the organization is to provide the money so that researchers can investigate the impact of a basic income on people’s lives. While Hughes has not funded Costello’s research, his group has contributed $1 million to Stockton, California’s basic income experiment, as well as to GiveDirectly, a Google-backed charity that is studying the impact of unconditional cash transfers in Kenya, and other projects.

        The Economic Security Project team also recently conducted its own survey of more than 1,000 Alaskans who receive roughly $2,000 per person, per year, through the Alaska Permanent Fund, which is drawn from oil revenues. It found that when faced with a choice between lowering taxes or keeping their cash payments, 71 percent of Alaskans say they want to keep the payments.

        “It feels like security,” Hughes says, “and in an economy that zigs and zags and has more part-time jobs, security is hard to come by.”

        Hughes is no basic income purist. He believes, for instance, that for this economic moonshot to be politically palatable, it would have to be tied to work. “Not just because it seems more intuitive for people,” he says, “but because work is a key source of purpose in our lives.” But the changing nature of work, particularly among top tech employers, is still a critical problem for the American workforce. One illuminating New York Times article illustrated how the men and women who scrub toilets and do other low-skilled work for companies like Apple are hired from contracting companies which set the terms of their employment. Those workers are cut off from the benefits and upward mobility that the company’s engineers and marketers enjoy. Because the workers are contractors, the big tech companies feel no pressure to raise their wages, and aren’t responsible for offering health-care coverage. In 2015, Facebook’s bus drivers voted to unionize in order to secure themselves the kind of worker protections that the social networking giant refused to provide.

        Looked at in this light, the tech-led efforts to push a basic income can appear hypocritical. In a new economy that mints billionaires overnight, giving millions of dollars away for experimentation is the easy part. It’s taxpayers, after all, not individual tech companies, who would have to pay for a basic income should one ever come to pass.

        Spencer McCoy, 21, is now in college and hopes to use his “big money” to start a business.
        Yael Malka for WIRED

        A legislated basic income is in the realm of fantasy at the moment. Even among its proponents there is almost no agreement about the fundamentals, starting with how much money would be an optimal basic income. Ioana Marinescu, a professor at the University of Pennsylvania’s School of Social Policy and Practice, who researches basic income, says that research on the Alaska fund is enlightening, but not dispositive. “We know $2,000 a year makes a real difference to many people,” Marinescu says. “But would something lower still make a difference? We don’t know.”

        Others argue that the problem with a universal basic income is the “universal” part. In a world in which every American gets a check, some of that money would necessarily be squandered on rich people. Some libertarian groups like the Cato Institute support the idea, seeing it as a way to replace the country’s existing social safety net programs like Medicare, Medicaid, and food stamps, an idea liberals deplore. “When resources for antipoverty policies are scarce and dwindling, especially in this Congress, we need to be careful about our targeting,” says Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and the former chief economist and economic adviser to Vice President Joe Biden.

        Bernstein prefers something like an expansion of the earned-income tax credit, such as the one Silicon Valley’s Khanna has introduced, which he says would put extra money where it is needed—in the pockets of working people. He concedes, however, that Khanna’s bill, the Grow American Incomes Now Act, is essentially on a hopeless path in the current Congress. “An idea like Ro’s is going to take a long runway,” Bernstein says. “It ain’t going to happen soon, but that doesn’t mean that if we were strategic it won’t happen later.”

        Even in a fever dream scenario in which a basic income could pass in Congress, there is so far little evidence that it would help the “forgotten men and women” whom Trump described in his campaign—the people whose plight supposedly woke Silicon Valley up to this problem to begin with. After all, $2,000 a year hardly feels like an adequate substitute for a disappeared $50,000 union job at the local steel mill.

        Even in Cherokee country, where the additional income is quite sizable, the payments are not enough to live on. That suggests a basic income may not be the life raft for working class adults that its proponents suggest it would be. But it could be something different: It could be an investment in their children’s future.

        During his 11 years as a high school football coach, and now working at the Boys’ Club, Skooter McCoy has seen just about every way that the casino money can be wasted. He remembers two football players who, after graduation, flew from Asheville to Key West and then road tripped their way back up the coast, stopping in beach town after beach town, and burning through tens of thousands of dollars of their newfound wealth.

        “I said, ‘Boys, you had an opportunity with this money to take care of yourselves for the majority of your lives. What do you have to say for yourselves?’” McCoy remembers. “They said, ‘Well, it was one hell of a month, coach.’”

        The money hasn’t exempted the community from the drug epidemic that has swept through so much of Appalachia, either. In fact, according to McCoy, when the checks come out twice a year, there seems to be an uptick in overdoses. “There are times when some people say members don’t even get a check, because they’re indebted to a dealer,” McCoy says. “When they get their check, they hand it right over.”

        As with any program, there are infinite opportunities for abuse and bad decisionmaking. But over time, the tribe has made tweaks to try to prevent recklessness. The tribal council recently passed legislation, for instance, that staggers the minor’s fund payouts. Now the tribe will give members $25,000 when they turn 18, $25,000 when they turn 21, and the rest when they’re 25.

        Spencer McCoy is now 21. Like his father, he has a square jaw and deep brown eyes, and he talks readily about the importance of Christianity in his life. He followed his dad to Western Carolina University, where he played football, before transferring to Mars Hill University, where he is pursuing a marketing degree. Like Skooter, Spencer imagined a different life for himself. But there’s one crucial difference between them: Unlike his father, Spencer says, he never doubted that he could have that life. “In my grandpa’s time, nobody from my area was going to college. My dad accepted a football scholarship, but without it I doubt he would have been able to go,” Spencer says. “Now we can go to school practically anywhere in the country, and they pay for it. That’s a really big deal.”

        When Spencer first got his “big money,” he says, “I’d get online and I was looking for trucks and stuff, but I thought at the end of the day, it wasn’t really worth it.” Aside from a used bass boat he bought to take out fishing, Spencer has stashed most of the money away in hopes of using it to start his own business one day.

        The true impact of the money on the tribe may not really be known until Spencer’s generation, the first born after the casino opened, is grown up. For the techies backing basic income as a remedy to the slow-moving national crisis that is economic inequality, that may prove a tedious wait.

        Still, if anything is to be learned from the Cherokee experiment, it’s this: To imagine that a basic income, or something like it, would suddenly satisfy the disillusioned, out-of-work Rust Belt worker is as wrongheaded as imagining it would do no good at all, or drive people to stop working. There is a third possibility: that an infusion of cash into struggling households would lift up the youth in those households in all the subtle but still meaningful ways Costello has observed over the years, until finally, when they come of age, they are better prepared for the brave new world of work, whether the robots are coming or not.

        1 Correction: 11/13/2017 10:49 am An earlier version of this story misstated Chris Hughes' net worth. The story has also been updated to clarify that Stockton, California's basic income project will not apply to all 300,000 citizens.

        Read more: https://www.wired.com/story/free-money-the-surprising-effects-of-a-basic-income-supplied-by-government/

        The GOP Tax Plan Is Entering Its Make-or-Break Week

        The $1.4 trillion item on President Donald Trump’s wish list — a package of tax cuts for businesses and individuals that he has said he wants to sign before year’s end — is headed into the legislative equivalent of a Black Friday scrum next week.

        Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday — a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail.

        Their chances improved this week when Republican Senator Lisa Murkowski of Alaska said she’ll support repealing the “individual mandate” imposed by Obamacare — a provision that Senate tax writers are counting on to help finance the tax cuts. Murkowski had earlier signaled some reservations about the provision; and her support was widely viewed as a positive sign for the tax bill’s chances.

        Trump is scheduled to address Senate Republicans at their weekly luncheon Tuesday afternoon on taxes and the legislative agenda for the rest of the year, according to a statement from Senator John Barrasso, chairman of the Senate Republican Policy Committee. 

        The White House previously announced that the president would talk with Republican and Democratic congressional leaders at the White House the same day about an agreement on spending to keep the government open after funding expires on Dec. 8. David Popp, a spokesman for Senate Majority Leader Mitch McConnell, and Drew Hammill, a spokesman for House Democratic leader Nancy Pelosi, both said that meeting is still on the schedule.

        If the tax bill clears the Senate — a step that’s by no means guaranteed — lawmakers in both chambers would have to hammer out a compromise between their differing bills, a process that presents potential pitfalls of its own. For now, though, much of the Senate’s attention will focus on its legislation’s price tag.

        Three GOP senators — Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma — have cited concerns about how the measure would affect federal deficits. Independent studies of the legislation have found that — contrary to its backers’ arguments — its tax cuts won’t stimulate enough growth to pay for themselves. Both the Senate bill, and one that cleared the House earlier this month, would reduce federal revenue over a decade by roughly $1.4 trillion, according to the Joint Committee on Taxation.

        On Wednesday, a report from the Penn Wharton Budget Model at the University of Pennsylvania said the bill would reduce federal revenue in each year from 2028 to 2033. That finding would mean it doesn’t comply with a key budget rule that Senate Republican leaders want to use to pass their bill with a simple majority over Democrats’ objections.

        Budget Rule

        In essence, that rule holds that any bill approved via that fast-track process can’t add to the deficit outside a 10-year budget window. The JCT has already found that the Senate bill would generate a surplus in its 10th year because it has set several tax breaks for businesses and individuals to expire.

        But JCT hasn’t yet weighed in publicly on the revenue effects in subsequent years. Senate GOP leaders have expressed confidence that their proposal will satisfy the rule ultimately.

        Another potential stumbling block stems from the fact that Congress is trying to act on complex tax legislation under a tight, self-imposed timeline in order to deliver on promises from Trump, House Speaker Paul Ryan and McConnell.

        For example, Republican Senator Ron Johnson of Wisconsin has said he can’t support the current Senate bill because it would give corporations a tax advantage — a large rate cut to 20 percent from 35 percent — that other, closely held businesses wouldn’t get.

        ‘Change the Most’

        His concern centers on the Senate’s plan for large partnerships, limited liability companies, sole proprietorships and other so-called “pass-through” businesses. Under current law, these businesses simply pass their earnings to their owners, who pay income taxes at their individual rates — currently, as high as 39.6 percent, depending on how much they earn.

        Read more: A QuickTake guide to the tax-cut debate

        The Senate bill would provide pass-through owners with a 17.4 percent deduction for income — but in combination with other provisions, that would result in an effective top tax rate for business income that’s more than 10 percentage points higher than the proposed corporate tax rate.

        The House bill would use an entirely different approach, setting a top tax rate of 25 percent for pass-through business income, but then limiting how much of a business’s earnings could qualify for that rate.

        Reconciling those differences — and addressing Johnson’s concern — may be a complicated process. “That’s part of the equation that could change the most over the next few weeks,” Isaac Boltansky, senior vice president and policy analyst at Compass Point Research and Trading LLC, told Bloomberg Tax. “No one is planning around it yet. There is uncertainty across the board.”

        Meanwhile, the Obamacare issue looms in the background — threatening at least one GOP senator’s vote. Susan Collins of Maine said earlier this week that tax bill “needs work,” and “I think there will be changes.”

        The 2010 Affordable Care Act — popularly known as Obamacare — contained a provision requiring individuals to buy health insurance or pay a federal penalty. Removing that penalty in 2019, as the Senate tax bill proposes to do, would generate an estimated $318 billion in savings by 2027, according to the Congressional Budget Office. The savings would stem from about 13 million Americans dropping their coverage, eliminating the need for federal subsidies to help them afford it.

        Because many of the newly uninsured would be younger, healthier people, insurance premiums would rise 10 percent in most years, the nonpartisan fiscal scorekeeper found.

          Read more: http://www.bloomberg.com/news/articles/2017-11-24/trump-s-1-4-trillion-tax-cut-is-entering-its-make-or-break-week