Did BetFair mess the expiry of the 2006 US Senate prediction markets?…- UK blogger Mike Smithson thinks so.
Anybody who had money on last November’s US MidTerms Senate market with Betfair will know what happens when the rules are not tied down tight enough. Then Betfair settled the election on the basis of a tie even though the actual outcome was that the Democrats took control of the Senate. Then the problem was the position of two senators who had not gone into the election as Democratic candidates but had said they would caucus with the [Democratic] party. An added complication for Betfair was that the Labour MP, Nick Palmer, had written to Betfair ahead of the election asking for clarification about Lieberman’s position and had received a written reply confirming that if he won he would be regarded as a Democrat. Palmer had posted this information of this site influencing, no doubt, a number of other punters in the process. […] [FYI, the rest of the story is on another alleged BetFair messing up.]
Chris Masse, circa November 2006:
[…] BetFair sticks with the ORIGINAL contract —as CLEARLY written ON DAY ONE on their “RULES” tab, and as understood correctly by everybody who can read plain English. NO SURPRISE, NO CONTROVERSY. “-Which of these parties will have MORE SEATS in the US Senate following the 2006 US Senate Elections?”- is a very different question than “-Which of these parties will CONTROL the US Senate?”-. There is no ambiguity in the first question. In the second question, it’s understood that you could control the US Senate with your allies (the Independents).
Now, let’-s contrast that with the 2006 North Korea Missile scandal prompted by a TradeSports-InTrade mistake.
#1. John Delaney, CEO of the firm managing TradeSports-Intrade, acknowledged recently in writing that the poorly defined contract was their fault.
[…] We experienced an issue with our North Korean market definition. […]
#2. Nevertheless, the TradeSports-InTrade who were right on the outcome (i.e., who bet “-yes”- on whether North Korea would fire a missile) got screwed up and lost their money.
#3. TradeSports-InTrade did nothing to compensate the victims of its mistake.
#4. Only the bloggers (like Donald Luskin or Barry Ritholtz, alerted by Chris Masse) came to the rescue of the screwed-up traders. The main media were mum about this scandal. (Rachel King of BusinessWeek told me she asked the question to John Delaney, but, unfortunately, she did not have enough space in her news article to talk about that. Pffff…- Pretext.)
#5. None of the prediction market scholars published a statement on the North Korea Missile controversy. The scholars are dependent on the three main prediction exchanges (BetFair, TradeSports-InTrade, Hollywood Stock Exchange, NewsFutures)…-yeah, I know, I’-ve listed four of them…- but the “-Three Musketeers”- were four, too…- anyway…- my point is that the prediction market scholars are dependent on the data provided by the four main prediction exchanges (betting exchanges) to fuel their research, just like the heroin addicts are dependent on their dealer. The prediction market scholars will never, ever, ever, utter a word against the prediction exchanges. Remember: no prediction market data, no research, no academic career. The exception is Robin Hanson, who does not beg for data. The guy is a new institution designer (idea futures, decision markets, MSR, etc.).
#6. None of the prediction market commentators (whom you see blablating on this group blog and elsewhere) published a statement on the North Korea Missile controversy. The Midas Oracle readers should know that many of those fine blablaters have as a goal to get hired by one of the prediction exchanges (betting exchanges, futures exchanges). Of course, if you’-re goal is to flatter exchange executives, then you won’-t deliver the truth for your readers.
#7. John Delaney, CEO of the firm managing TradeSports-Intrade, insisted to let know to the general public (and the prediction market scholars) that Chris Masse lost $10,000.
#8. And I won’-t mention the e-mail insults I received from Ireland.
#9. John Maloney, the mediocre, second-tier organizer of phone-booth, vendor micro-conferences (sponsored by TradeSports-InTrade) unleashed on Chris Masse, “-the one-trick pony”-.
#10. Contrary to BetFair, InTrade is unregulated in Ireland and TradeSports is unregulated in The Netherlands Antilles. It is thus impossible for the screwed-up traders to appeal to a higher authority. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.
#11. Contrary to BetFair, both TradeSports and InTrade are not members of the Independent Betting Arbitration Service. It is thus impossible for the screwed-up traders to appeal to a higher authority. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.
#12. Contrary to BetFair, both TradeSports and InTrade have a track record of screwing up traders. You will notice that the prediction market scholars and the journalists never mention this fact.
- TradeSports — SportsBook Review rating: C+ (Scale: A+ to F-) — Bookmakers Review rating: 3.5 / 5 —
- InTrade — SportsBook Review rating: C+ (Scale: A+ to F-) — Bookmakers Review rating: 3 / 5 —
#13. You will notice that when a big trader vents his frustration with TradeSports-InTrade (A Big Trader’s Open Letter to TradeSports-InTrade), the prediction market scholars, the bloggers and the journalists don’-t follow up.
#14. You will also notice that when TradeSports-InTrade obviously screws up a prediction market (InTrade-TradeSports – Next Major Sportsbook to Withdraw from US), the prediction market scholars, the bloggers and the journalists don’-t utter a word.
#15. Contrary to BetFair, both TradeSports and InTrade do not have a responsible gambling program. You will notice that the prediction market scholars, the bloggers and the journalists never mention this fact.
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CFM and Midas Oracle tell the full truth on the prediction markets: the bright side AND the dark side. THANKS FOR YOUR SUPPORT.
None of the prediction market scholars published a statement on the North Korea Missile controversy. The scholars are dependent on the three main prediction exchanges
“Scholars” do not make statements on subjects that they have not carefully considered, especially when others out there have considered those subjects more carefully. I have no special expertize in figuring out whether exchange X made a fair decision in settling bet Y. Others put a lot more time into evaluating those claims, and so I will defer to them.
Your statement is reasonable.
However, please consider something. When you, scholars, publish on the accuracy of the TradeSports-Intrade prediction markets, by the same token, you give your stamp of approval to this Irish prediction exchange (betting exchange) and your writings will indirectly (thru media quotes) inform the public —and thus publicize this Irish exchange. My point is that, yes, it’s good to celebrate the accuracy of prediction markets from TradeSports-Intrade, but it’s also important to tell people that TradeSports-InTrade, as an organization, is less reliable than BetFair. This critical remark is due to the public, as a matter of truth. Truth requires us to look at things thru different angles.
Once people are better informed, there is more pressure to the exchange executives, and over time, service quality will improve.
TradeSports-Intrade has better serviced the US-centric event derivative speculators. It’s true. But there are some problems with this Irish prediction exchange, which should be listed and addressed.