Category Archives: Analysis (Industry)

The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).

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Last year, I said that the BetFair prediction markets on global warming would fail.

I said:

My prediction is that the first two BetFair Global Warming prediction markets (HSBC Investable Climate Change Index and ECX CFI Futures Contract) will fail miserably.

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They failed, indeed. Remain only those two prediction markets, with ultra light volumes: Highest and Lowest UK Temperature.

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As for the InTrade prediction markets on climate change (USA agrees before end of 2009 to reduce CO2 emissions by 10% or more by year 2025), liquidity is more than thin.

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Now, ask yourself:

  • If BetFair and InTrade (which are for-profit prediction exchanges) encounter difficulties with those &#8220-socially valuable prediction markets&#8221-, why would not-for-profit prediction exchanges (like the Iowa Electronic Markets) be more successful at it?
  • Don&#8217-t you think that the American Enterprise Institute&#8217-s proposals (which would outlaw the for-profit prediction exchanges) are out of whack? I do. Let&#8217-s do something.

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The CFTC is going to close the comments in 12 days. We have 12 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

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BACKGROUND INFO:

– CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyers explain the meaning of the CFTC&#8217-s concept release on &#8220-event markets&#8221-. &#8212- (PDF file)

– What Vernon Smith told the CFTC.

– American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

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APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

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The CFTC is going to close the comments in 13 days. We have 13 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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PREVIOUSLY:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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BACKGROUND INFO:

– CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public.

– Arnold &amp- Porter lawyers explain the meaning of the CFTC&#8217-s concept release on &#8220-event markets&#8221-. &#8212- (PDF file)

– American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

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APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

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The CFTC is going to close the comments in 16 days. We have 16 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

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PREVIOUSLY:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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BACKGROUND INFO:

– CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public.

– American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

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CALL TO ACTION: Lets fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with event markets.

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The second feedback I have received about my speculative post goes like this: &#8230-If some believe that the CFTC might rule that &#8220-event markets&#8221- should be treated only by not-for-profit, IEM-like, prediction exchanges&#8230- &#8230-while some others think that&#8217-s not the case&#8230- &#8230-even though a powerful American think tank is advocating that only not-for-profit prediction exchanges be allowed to organize &#8220-event markets&#8221-&#8230- &#8230-then all that means that this issue is probably still up in the air&#8230- &#8230-and worth fighting for.

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I&#8217-m told people who favor for-profit prediction exchanges (and in their wicked mind, that includes the author of this post) should write to the CFTC.

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UPDATE: NOT-FOR-PROFIT&#8230- or&#8230- FOR-PROFIT&#8230- That is the question.

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UPDATE: In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public.

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In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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In the American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America, they advise the CFTC not to allow for-profit prediction market companies (like InTrade, TradeSports and BetFair) to operate socially valuable prediction markets &#8212-in a legal way, in the US.

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It&#8217-s a shame that our prediction market luminaries signed that piece of ****.

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Previously: CALL TO ACTION: Let’s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with “event markets”.

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NOT-FOR-PROFIT… or… FOR-PROFIT… That is the question.

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The dilemma goes like this:

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  1. If the CFTC allows for-profit prediction exchanges &#8211-&gt- that&#8217-s a good step forward (even though sports are excluded from the legal offerings)-
  2. If the CFTC allows only not-for-profit prediction exchanges &#8211-&gt- that&#8217-s a micro step forward (but still positive in the eyes of many).

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BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public.

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UPDATE: In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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Since 2005, the Commission’s staff has received a substantial number of requests for guidance on the propriety of offering and trading financial agreements that may primarily function as information aggregation vehicles.

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&#8220-Since 2005&#8243-&#8230-

Interesting&#8230-

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2003: Robin Hanson&#8217-s PAM ends up on newspaper frontpages&#8230- – [That’s when I got started in prediction markets.]

2004: James Surowiecki launches &#8220-The Wisdom Of Crowds&#8221-&#8230-

2004: InTrade-TradeSports popularize &#8220-Bush Re-Election&#8221- prediction markets&#8230-

2005: Wannabe prediction market entrepreneurs begin to question the CFTC about the regulation of real-money prediction markets&#8230-

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What I find interesting here is the time lag&#8230- It took a while, it seems&#8230-

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More info about prediction market history&#8230-

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Our prediction market luminaries signed Bobs petition -and the losers are InTrade, TradeSports and BetFair.

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I have re-read the American Enterprise Institute’s proposals to legalize real-money prediction markets in the United States of America.

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AEI advise the CFTC not to allow for-profit companies (like InTrade, TradeSports and BetFair) to operate socially valuable prediction markets &#8212-in a legal way, in the US.

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It&#8217-s a shame that our prediction market luminaries signed that piece of ****.

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Long live Steve Levitt and Koleman Strumpf.

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And long live the prediction markets on sports&#8230- &#8212-and on anything else.

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UPDATE: In the for-profit vs not-for profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

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The term event markets sucks -and the uncritical thinkers using this crappy term suck too.

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Google: &#8220-event markets&#8221- &#8212- Funny enough, the first link is to the Futures Industry Association, which promoted the term&#8230- and the second to CFM, which advises not to use that term (see the bottom of the CFM frontpage). :-D

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Just because 2 or 3 bureaucrats at the CFTC have decided to use that term does not mean that that term makes sense. It does not. &#8220-Event derivative markets&#8221- or &#8220-prediction markets&#8221- are better terms. It&#8217-s with great displeasure that I saw our own Mike Giberson (supposedly, a libertarian, and supposedly, a wannabe academic) followed the step of the CFTC like an obedient little poodle. :-D

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Just because somebody in power says something stupid that makes no sense at all does not mean that you should swallow it and direct it straight to your stomach.

Use your brain to perform critical reasoning.

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