ABC News:

[…] Betfair can take bets from right around the country [Australia], but needs a change in law in states other than Tasmania – where it is already licensed – to enable it to advertise. Mr Twaits says the laws are invalid and are holding racing back.

&#8220-Thoroughbred racing&#8217-s share of the total gambling pie in Australia has dropped from 26 per cent in 1991-92 down to 8 per cent last year, and it&#8217-s continuing to slide,&#8221- he said. &#8220-And the reason for that is that punters, or gamblers generally, are moving to low-margin products that have nothing to do with racing and racing doesn&#8217-t earn a return from those forms of gambling. As a low-margin operator, what we offer racing is the chance to compete better with those non-racing low-margin operators and return a fair amount to the industry.&#8221-

The NSW racing industry says Betfair does not return a fair amount to the industry, paying 24 cents per $100, compared to $1 from bookmakers and $4.50 from the TAB. But Mr Twaits says that is &#8220-just plain wrong&#8221-. &#8220-We&#8217-ve never put an offer to any racing industry official in the country that has been in those terms,&#8221- he said. &#8220-What we have offered to do is to pay a share of our gross revenue to the racing industry and a share of the gross revenue that we&#8217-ve offered to pay is in line with what the TABs pay here in Australia. What matters is how much punters spend with wagering operators. So what they spend with us and what they spend with the TAB might be markedly different but if we agree to pay the same percentage of that spend to the racing industry then they should be happy with that.&#8221-

Thanks to Niall O&#8217-Connor for this interesting link.

Dion Hinchcliffe on applying the concept of &#8220-Enterprise 2&#8243-:

I’ve witnessed prediction markets in particular become enormously popular in the last year or so as enterprises seek to better tap into the cumulative wisdom of their workers.

If only 5% of the Fortune-500 firms are currently experimenting with an internal prediction exchange (betting exchange), then you shouldn&#8217-t use the words&#8230- &#8220-enormously popular&#8221-&#8230- yet.

Folks, I want to tackle this important issue in this blog post. But first, I will excerpt two news articles from The Economist. The first one was written by their American correspondence, and the second one was written by their UK-based journalists. [Technical Note: Since each of the stories from The Economist is written collectively by a bunch of journalists (whose names are not disclosed, by the way), this is the reason I use the plural for the word “journalists”.]

&#8212-

The Economist #1:

Hillary Clinton
Ready to run the movie again?

Oct 4th 2007 | WASHINGTON, DC
From The Economist print edition
The betting is that the Clintons will follow the Bushes back into the White House

[SECOND PARAGRAPH] […] Mrs Clinton is way out in front of the Democratic field. The latest Washington Post/ABC News poll puts her 33 points ahead of Barack Obama and 40 points ahead of John Edwards. She raised $22m in the last quarter—more than Mr Obama at $19m and much more than Mr Edwards at $7m. The once-mighty Republican Party is a shadow of its former self, divided not only about who should lead it but also about where it should go. Intrade, a pay-to-play prediction market, shows a 36% chance of the Republicans holding the White House alongside a 12% chance of them taking the House and a 7% chance they might take the Senate. […]

The Economist #2:

Polls and elections
One man, one decision

Oct 4th 2007 – [BY A UK-BASED TEAM OF JOURNALISTS, I SUPPOSE]
From The Economist print edition
Public-opinion surveys cannot tell the prime minister when to go to the country

[LAST PARAGRAPH] In 2005 the most accurate predictions came not from the opinion polls but from online betting markets. This time, says Leighton Vaughan Williams of Nottingham Trent University&#8217-s Betting Research Unit, an election before Christmas is odds on and Labour is hot favourite to win the most seats. But the odds that Labour will get an overall majority are just slightly better than even. “So,” asks Mr Vaughan Williams, “is the prime minister willing to risk his majority on the toss of a coin?”

&#8212-

– INTERESTING OBSERVATION: Right away, in the first paragraph, the US-based journalists inform their audience with a combo of polls and probabilistic probabilities from the most liquid betting exchange in America (InTrade). Whereas the UK-based journalists will give, in the last paragraph, a bit like an anecdote you tell to your friends at the end of a good lunch, some vague indications given by the &#8220-betting markets&#8221- (not well defined). [*]

– ANALYSIS &amp- REMEDY: My hunch is that the UK-based journalists have not been spinned well enough by the prediction market economists. The remedy is that the British journalists (news writers, reporters, columnists, bloggers, etc.) should be exposed to the wisdom-of-crowds science in events or press conferences.

&#8212-

[*] ADDENDUM: Professor Leighton Vaughan-Williams&#8216- e-mail to me&#8230-

In the &#8216-Economica&#8217- article reference is made to the 2005 British election. For that election I used exchanges (notably, but not exclusively, Betfair and Intrade), the Cantor Spreadfair &#8217-spread betting&#8217- exchange, spread bookmakers, notably IG Index and Sporting Index, and to a lesser extent fixed-odds bookmakers like Ladbrokes and William Hill.

In reference to the next election, the odds quoted were those quoted on Betfair at 9.30 am (UK time) yesterday.

&#8212-

Ellen Goodman:

[…] The closed-minded hedgehogs are those who know &#8221-one big thing&#8221- and relate everything to that single, central vision. The open-minded foxes &#8221-know many little things&#8221- and accept ambiguity and contradictions. […] It&#8217-s no surprise that foxes are better at forecasting than hedgehogs. […] How then do we cultivate good judgment? Most Americans are probably hybrid creatures. In a fox-like moment, Tetlock advises that we listen to our own ambivalence as &#8221-we struggle to strike the right balance between preserving our existing worldview and rethinking core assumptions.&#8221- […]

Hal Finney:

[…] One of the psychological measures or metrics which Tetlock found was well correlated with expert accuracy goes back to a distinction introduced by Isaiah Berlin in his book, The Hedgehog and the Fox. I haven&#8217-t read that book, but based on Tetlock&#8217-s presentation, Berlin distinguished between two cognitive styles to which he gave these colorful names. The hedgehog is said to know one thing and know it well. He sees events and trends in terms of his big idea, and aggressively extends it into new realms. Hedgehogs tend to be confident in the applicability of their fundamental concepts and impatient with those who &#8220-do not get it&#8221-. Foxes in contrast know many small things which they bring to bear in their analyses in a dynamical and flexible way. They tend to be uncertain and flexible, &#8220-on the other hand&#8221- types who are skeptical about their own predictive ability and in fact about the whole enterprise of making predictions in such an intractable realm. […]

Daniel Drezner:

A hedgehog is a person who sees international affairs to be ultimately determined by a single bottom-line force: balance-of-power considerations, or the clash of civilizations, or globalization and the spread of free markets. A hedgehog is the kind of person who holds a great-man theory of history, according to which the Cold War does not end if there is no Ronald Reagan. Or he or she might adhere to the “actor-dispensability thesis,” according to which Soviet Communism was doomed no matter what. Whatever it is, the big idea, and that idea alone, dictates the probable outcome of events. For the hedgehog, therefore, predictions that fail are only “off on timing,” or are “almost right,” derailed by an unforeseeable accident. There are always little swerves in the short run, but the long run irons them out.

Foxes, on the other hand, don’t see a single determining explanation in history. They tend, Tetlock says, “to see the world as a shifting mixture of self-fulfilling and self-negating prophecies: self-fulfilling ones in which success breeds success, and failure, failure but only up to a point, and then self-negating prophecies kick in as people recognize that things have gone too far.”

I wanted to go back to this 2005 book from Philip Tetlock (Expert Political Judgment: How Good Is It? How Can We Know?) because I have been thinking of the big issue of last Tuesday (Should a betting exchange be a content provider, too?). My answer is: A betting exchange has no business being a content provider&#8230- except if the betting exchange can and will develop some very special content that the traditional media can’t or won’t provide, and that is of high strategic interest. You&#8217-ll spot that that&#8217-s the kind of twisted answers that the foxes would give. And I am wondering whether one could say that the hedgehog thinking (read it, the bad thinking) is in fact represented in the two other camps:

1. those who think that the betting exchanges have no business being content providers-
2. those who think that the betting exchanges should also be content providers.

The answer to this dilemma is, of course, &#8230- and if Mike Linksvayer is reading this blog post, he has already divined where I want to lead my readers with all this &#8230- the answer is, of course, innovation.

&#8212-

Should BetFair have acquired TimeForm (the publisher of horseracing ratings, form guides and analysis)? Niall O&#8217-Connor (a betting market expert) thinks that there is a &#8220-strategic mismatch&#8221- between the two. I&#8217-m republishing his hatchet job, below. (I hope he won&#8217-t mind that I quote him in full, this time.)

At the end of November 2006 Betfair acquired Portway Press Limited, the owner of Timeform, the world-renowned brand involved in the publication of horseracing ratings, form guides and analysis. It was suggested at the time that the acquisition had cost Betfair somewhere in the region of ?15m.

At the time of the acquisition, Betfair announced that Timeform would retain full editorial independence, but that it would bring capital investment, technology, marketing and communication skills to the table.

On publishing its results for the year ended 30 April 2007, Betfair said that Timeform had &#8220-made a small loss in its first five months of trading after acquisition&#8221- but that it was confident that it would generate positive returns in the near future.

One can only speculate as to what the strategic thinking behind the acquisition was. Presumably it was believed that an association with the prestigious Timeform brand would make Betfair&#8217-s horse racing services more creditable- whilst at the same time affording cross-marketing opportunities.

Flawed logic at best&#8230-.

First, it is widely acknowledged that Betfair has given rise to, and nurtured, a culture of trading. Betfair traders do not typically run to form books, but rather, they let the Betfair market guide them, in the belief that it reflects all known information. (Betfair, with its lower transactions and information costs, provides its traders with a more realistic assessment as to the chance of longshots and the true probabilities of runners in a horse race- the favourite longshot bias is typically diminished, if not eroded).

Second, there is a strong case to be made that the incorporation of Timeform experts into Betfair&#8217-s horse racing radio service, has merely served to undermine the exclusiveness of the Timeform brand. Indeed, in situations where the Timeform expert&#8217-s selection fails to win, the brand is exposed to ridicule.

It is debatable whether the rather highbrow and serious research provided by Timeform, has any strategic fit with the Betfair trading culture. And one is therefore left to conclude that Betfair has not only misjudged the market for Timeform products, but also, demonstrated a serious lack of awareness of its own customers.

The hard truth of a failed plan is that the core values of the Timeform brand have been diluted through its association with a commercial betting exchange.

Hummm&#8230- I won&#8217-t make any comment on TimeForm (which I&#8217-m not familiar with). However, I will say this, generally speaking.

1. A betting exchange has no business being a content provider.
2. Except if the betting exchange can and will develop some very special content that the traditional media can&#8217-t or won&#8217-t provide, and that is of high strategic interest.
3. The difficulty, though, is that exchange executives and managers don&#8217-t have the first clue about how to set up and run a credible and popular media.
4. That said, it could well be that some exchange-sponsored or -run media projects will succeed &#8212-due to some highly talented project managers (the exception, not the norm).

&#8212-

NEXT: Predictor Accuracy: the Hedgehog vs. the Fox

Could Emile Servan-Schreiber push his Bet2Give concept a bit further?

I&#8217-m thinking of something, having in mind the LongBets experiment. Bet2Give lets traders select the charity of their choice. Good. But can&#8217-t we go further than that? Why not letting some people (like Robin Hanson and his gullible fanboys like Chris Hibbert ) create some long-term, socially valuable prediction markets, all this funded by foundations or think tanks&#8217- money (since the money will never leave the non-for-profit world, anyway). I mean, if AEI-Brookings funded the experiment, the subsidized traders could designate AEI-Brookings as the recipient of the trading winnings, right? So, the AEI-Brookings money would indeed be used for the trading, but, in the end, it would cost AEI-Brookings only some trading fees (5 cents for each dollar).

And, I&#8217-d like to see more interactions between blogs and prediction markets. In the scenario above, there would be a strong incentive to do just that from the part of all those crazy blogging experimental economists, don&#8217-t you think? Those hyper inflated egos will fire blog posts like crazy about their ongoing experiments at Bet2Give, and that would help the marketing of those experimental prediction markets.

Bet2Give is a too good idea to bet let it in the hands of Emile Servan-Schreiber. Does EJSS have what it takes to push the Bet2Give concept further? (EJSS is much smarter than most people in the field of prediction markets, but that&#8217-s not enough. He is not crazy enough.) I suggest that Bet2Give be declared of international social utility and be run by the Organization of the United Nations.

Previous: Here’s how Bet2Give explains what a prediction market is to its prospects.

Betting @ BetFair – The Official BetFair News Site

&#8212-

&#8230- is a piece of ****.

#1. The brand name of this sub-site is crappy.

#2. The organization of the content is crappy.

#3. The content is crappy.

#4. Everything in it is totally crappy.

&#8212-

My meta thoughts:

1. The non-media, commercial companies cannot produce interesting journalistic content &#8212-unless they partner or buy out a media.
2. Most people don&#8217-t have what it takes to be a good journalist. The blogging revolution has opened the door to many wannabe journalists, which is good&#8230- but still&#8230- only a small percentage of all the bloggers are good journalists. A good journalist is fundamentally a bastard. He/she would kill his/her mother to get the scoop, to find the right headline, to grab attention, and to advance his/her ideological hidden agenda. [*] That&#8217-s a very different mindset than executives and managers have. Journalists are a special species.
3. As of today, it is inconceivable to publish on the Web and not to abide by the conventions and standards established by the other publishers. In other words, if you publish a group blog, it should resemble in its layout to the other group blogs &#8212-because that&#8217-s what your readers are accustomed to. Most of your readers spend most of their time elsewhere on the Web, are shaped by that experience, and then impose the conventions and standards to your website.

&#8212-

[*] For instance, Mike Smithson&#8217-s hidden agenda is dual: number one, political betting has a social utility (forecasting), and, number two, the Liberal Democrats (that&#8217-s the third party in the U.K.) are good for Britain.

&#8212-

Note: I was admonished by Niall O&#8217-Connor, yesterday, for using a &#8217-special&#8217- image that conveyed perfectly what I thought about this BetFair sub-site. I suppressed the shocking image, to make up with the Irish betting man. He was right that it attracted attention- that blog post was the most downloaded, yesterday. Rock around the bunker… Rock around, rock around… Rock around the bunker… Rock around, rock around… Rock around the bunker… Rock around, rock around…

Author Profile&nbsp-Editor and Publisher of Midas Oracle .ORG .NET .COM &#8212- Chris Masse&#8217-s mugshot &#8212- Contact Chris Masse &#8212- Chris Masse&#8217-s LinkedIn profile &#8212- Chris Masse&#8217-s FaceBook profile &#8212- Chris Masse&#8217-s Google profile &#8212- Sophia-Antipolis, France, E.U. Read more from this author&#8230-

• Are David Pennock’s search engine prediction markets the worst marketing disaster since the New Coke?
• Midas Oracle is incontestably [*] the best vertical portal to prediction markets.
• Comment spam paid by Emile Servan-Schreiber of NewsFutures-Bet2Give
• BetFair Games needs a Swedish provider to develop its gambling offerings.
• When Markets Beat the Polls – Scientific American Magazine
• Robin Hanson has some fanboy in India. Great. Tiny caveat: The parroting Indian writer does not acknowledge Robin Hanson by name.
• Molecular Nanotechnology