Hard question, but probably no. First, I don't think a "youtube for games" will succeed, at least I wouldn't use it, but people keeps watching sports life/on TV and I find it quite boring so maybe in 5/10 years there are more pople watching the Final match of the Unreal Tournament World Series than the Superbowl.
Second, $500k seems a way too much! I believe it's better to start small but be ready to scale. And more for a risky business like that.
So, I wouldn't give him $500K, $25K to $50K yes but no more, at least until they have a public site and need the money to grow.
One thing worth mentioning is that this sounds like fraps/youtube integrated not just a niche video site. If his video capturing technology is as good as he claims (I'm in the wait for the private beta so we'll see) he may have something here.
Yea I was going to say the same thing, his company is more than just a "YouTube for gamers". His secret weapon seems to be his "software camera". I'm actually curious as to how he is implementing that without requiring the standard video capturing hardware. As far as I know, there is no good software-only solution that won't bring your gaming to a crawl.
It sounds quite interesting, a real time bet system. The toughest would be to develop some kind of broadcasting system compatible with games made by different vendors and running on different platforms (i.e. bet on UT, on Halo, on strategy games, sports games...), and there maybe some legal problems with the vendors but if there's money everybody can agree.
Second, $500k seems a way too much! I believe it's better to start small but be ready to scale. And more for a risky business like that.
So, I wouldn't give him $500K, $25K to $50K yes but no more, at least until they have a public site and need the money to grow.