“-Anonymous”- to Patri Friedman (thanks to Jason Ruspini for the link):
Have you tried Betfair? www.betfair.com . Chris Masse over at Midas Oracle www.midasoracle.com —- the main prediction markets blog —- tends to support them over InTrade. The interface is not as nice as InTrade’-s though (they give punter odds rather than decimal probability prices).
#1. BetFair won’-t let any U.S. resident opens an account, because BetFair has decided to abide by US laws. (See: “-We wish to reiterate our well documented and long-standing policy of not accepting US customers, funds, or bets.“-) That said, some US residents have managed to open BetFair accounts via the complicity of British friends. As you all know, TradeSports-Intrade was created and became successful on two premises: number one, BetFair won’-t enter the US market until it is legal, and, number two, US-based prediction exchanges (betting exchanges, event futures exchanges other than hedging-oriented) are not legally allowed to perform operations. Thus, the situation we have today: TradeSports-Intrade is the de facto monopoly in the US market of unregulated event derivatives. (MatchBook is trying to pierce with a marketing strategy a la TradeBetX. And, of course, online sportsbooks are TradeSports-Intrade’-s competitors.)
#2. There are many real-money prediction exchanges (betting exchange, event futures exchanges). To trade or to get probabilities, you should select the one that has the most volume on the (regulated or unregulated) event derivative you’-re interested in. For US politics, it’-s TradeSports-InTrade. For British and Irish politics, it’-s BetFair.
#3. BetFair is indeed a formidable operator —-big, powerful, ethical, with a fantastic technical team, and a robust and sophisticated software. Very long term, BetFair is going to take over Trade-Sports-InTrade in the US.
#4. The prices (which the economists allow us to interpret as probabilities, when these prices come from prediction exchanges, as opposed to bookmakers) can be expressed in four ways: 0–-100, American, fractional or decimal. It’-s all equivalent. For instance, you take the number “-1″-, you divide it by the BetFair’-s “-last price matched”- expressed as”-decimal odds”-, you multiply it by “-100″-, and you get your 0–-100 price/probability.
BetFair: Republican Nicolas Sarkozy as next French President
Total matched on this event: $728,806
Betting summary – Volume: $463,083
Last price matched: 1.32 [“1” divided by “1.32” and multiplied by “100” = 75.8%]
BetFair explainer on decimal odds:
What are Decimal Odds?
All prices quoted on Betfair are ‘-Decimal’- Odds. Decimal Odds differ from the Odds traditionally quoted in the UK in that they include your stake as part of your total return. If you place a bet of ?10 at Decimal Odds of 4.0 and win, then your total return (including stake) is ?40. In the UK this would be quoted as 3/1, returning to you winnings of ?30 plus your original stake of ?10.
Decimal Odds are simpler to use than Traditional Odds, and are the most common form of Odds quoted in countries outside the UK. In addition, for the mathematically minded, Decimal Odds relate more closely to probability: in a race with four equally-matched horses, the probability of each horse winning is 25%. Each horse will have Traditional Odds of 3/1 or Decimal Odds of 4.0. Hence, the probability of an outcome equals 1 divided by its Decimal Odds (1 / 4.0 = 25%).
Decimal Odds also offer many more prices – Betfair offer every price between 1.01 and 2.0 to two decimal places. With no margins to protect, our customers deserve to see every price available.
#5. Any software for prediction markets (and betting exchanges) should be able to convert the prices in these four different formats —-on top of being translated in many foreign languages.
#6. British consultant wannabe Jed Christiansen, freshly minted “-from the London School of Economics”-, has a new blog post out (he blogs on a monthly basis) on BetFair versus TradeSports-InTrade (BetFair being “-betting”-, and InTrade-TradeSports being “-financial”-), which is the most ridiculous statement I have ever read since Paris Hilton declared to the world that she was going to morph herself into a “-savvy business titan”-.
– Jed Christiansen tries to divine the “-psychological approach”- of BetFair and TradeSports-InTrade. Oh, mon Dieu!…- Jed Christiansen’-s thinking is rotten from the start. Just like the beauty is in the eye of the beholder, the marketing “-approach”- is conditional to its adoption by the customers/consumers. Any popular products (here, event derivatives, prediction markets) belong to its customers/consumers (here, the traders and the info consumers), and then the “-approach”- is to listen to the improvement they suggest to the service. Any incremental innovation of your prediction market software is just the anticipation of future traders’- needs. Event derivative traders on both sides of the Atlantic have the same needs. The traders are in the driver’-s seat. If they are satisfied, they patronize and come en masse (no pun intended), and if they are not, they leave. Traders don’-t give the first fig about the “-psychological approach”- of the prediction exchanges. You can’-t spin the British and Irish traders one way, and the American and Canadian traders another way. Trader’-s needs are imperial and universal. It’-s the traders who shape the prediction exchanges (betting exchanges) their way.
– Jed Christiansen makes a big fuss out of tiny differences between BetFair and TradeSports-InTrade. For instance, BetFair outputs prices as “-decimal odds”-, and, of course, the Grand Inquisitor views it as a sign from God that BetFair is “-betting”-. But that’-s bullshit, as the readers of Midas Oracle all know. With a simple computation, you can transform the “-decimal odds”- into 0–-100 prices. (You take the number “-1″-, you divide it by the BetFair’-s “-last price matched”- expressed as”-decimal odds”-, you multiply it by “-100″-, and you get your 0–-100 price/probability.)
– BetFair uses the words “-back”- and “-lay”- (instead of “-bid”- and “-ask”-) and the Grand Inquisitor views it as yet another sign from God that BetFair is “-betting”- (as opposed to “-financial”-).
– Jed Christiansen states that the “-psychological approach”- of BetFair (being “-betting”-) is dictated by the fact that its competitors are the British bookies (and the online bookmakers, I will add). The main competitors of InTrade-TradeSports are the US illegal bookmakers and the offshore sportsbooks. BetFair and InTrade-TradeSports both have the same kind of competitors, the fixed-odds bookmakers. (Being illegal in America, InTrade-TradeSports can’-t market to the sophisticated US horse race bettors.)
Jed Christiansen has opted for religion over theory. He religiously believes that BetFair is “-betting”- and InTrade-TradeSports is “-financial”-, and he will take any insignificant piece of evidence to make his case.
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External Link: Nisan Gabbay on BetFair
Previous: BetFair Case Study – Betting Exchange – Prediction Markets
[…] Betfair on the other hand was built like a stock market exchange, where odds functioned as the share prices. […]
UPDATE: Yahoo! research scientist David Pennock comments…-
I think Jed Christiansen is correct to a large degree. Betfair speaks the punter’s (gambler’s) language. TradeSports speaks Wall Street’s language. I have a bookie friend who upon first look at TradeSports couldn’t make heads or tails of it. Chris is right in that both betfair and TradeSports perform the same service. However their target audience, at least initially, is different.
NEXT: User Interface &- Target Audience: BetFair, TradeSports-InTrade, MatchBook, etc.
UPDATE: Jed Christiansen…-
That was the point I was trying to make. In the end, both types of sites accomplish the exact same thing- an event futures market. But I was pointing out the differences in how the sites work that come from their positioning in the marketplace.
In my perfect world, a trader could choose how they interacted with an exchange. They could choose a basic interaction, or a user interface with lots of options. They could choose to see contracts in decimal odds or percentages, etc. It’s not as easy as it sounds, which is why we probably haven’t seen it yet.
UPDATE: David Stalcup…-
In fact you can see odds listed decimal, 0–100 prices or moneyline format (-110) at TradesSorts. You just make that choice at TradeBetX with your TradeSports login info. You have the option of viewing odds in any format. TradeBetX/TradeSports are the same company, just different branding and options at TradeBetX.
I think Jed Christiansen is correct to a large degree. Betfair speaks the punter’s (gambler’s) language. TradeSports speaks Wall Street’s language. I have a bookie friend who upon first look at TradeSports couldn’t make heads or tails of it. Chris is right in that both betfair and TradeSports perform the same service. However their target audience, at least initially, is different.
In fact you can see odds listed decimal, 0–100 prices or moneyline format (-110) at Tradesports. You just make that choice at Tradebetx with your Tradesports login info. You have the option of viewing odds in any format. Tradebetx/Tradesports are the same company, just different branding and options at Tradebetx.