The MindSports Rating System
MindSports uses a rating system based on the Internet Chess Server (ICS) system, brought to my attention by Richard Rognlie's PBeM Server.
When a game finishes, each player gains or looses points the amount of which depends on the difference of their ratings.

Provisional or Etablished
A player is said to be established if he has finished 20 or more games, and provisional otherwise. The rating system for a provisional player is very different from the one for an established player.

Provisional Rating
For a provisional player every game has a value, and the player's rating is the average of those values.
The value of a game is the average of the ratings of both players (taking 1600 for a player without a rating) increased by 200 on a win, or decreased by 200 on a loss, for a game against a provisional player. Add or subtract an extra 200 if the opponent is an established player.

Below, you see the stats of the first three games of a new provisional player, against other provisional players.

Game Rating opponent Result Game value New rating
1 1600 won 1800
= (1600+1600)/2 + 200
= (1800)/1
2 1700 won 1950
= (1800+1700)/2 + 200
= (1800+1950)/2
3 1750 lost 1613
= (1875+1750)/2 - 200
= (1800+1950+1613)/3

Note that as a provisional player, winning from a provisional player whose rating is more than 400 lower than yours, will decrease your rating.

Established Rating
Let r1 be your rating and r2 the opponent's. Let w be 1 if you win .5 if you draw and 0 if you lose. Your new rating will then be:

                r1 + K * (w - (-----------------))
                               1 + 10

The variable K represents the largest amount your rating can change as a result of the game. The value K=32 is always used against an established player. (The USCF has a system in which this K-factor diminishes for more highly rated players.) Against a provisional player the factor K is scaled by n/20, where n is the number of games your opponent has played. So if you play an opponent who has never played, your rating can't change.

This formula has the property that if both players are established, then one player's gain equals the other player's loss. It turns out that if the rating difference is more than 719 points, there's no change in either rating if the stronger player wins.

Below are three games from an established player rated 1600 initially, against other established players.

Game Rating opponent Result New rating
21 1600 won 1616
22 1700 won 1636
23 1750 lost 1625