Tag Archives: betting markets

After the demise of TradeSports, questions (re-)surface about the viability of InTrade.

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My post about the sudden closure of TradeSports was the #2 most downloaded webpages, yesterday &#8212-even though that post was published late yesterday. And this morning, I am receiving tons of e-mails from the InTrade and TradeSports traders (they are often the same people).

My reasoning:

  1. InTrade is the twin site of TradeSports.
  2. The closure of TradeSports was sudden.
  3. The TradeSports owners have closed shop less than 2 months before the SuperBowl &#8212-the biggest $$$ drawer.
  4. Now that the 2008 US presidential elections are over, the InTrade heyday is over. No more liquidity. No more media coverage. See you in 2010 and 2012.
  5. If TradeSports couldn&#8217-t survive the Unlawful Internet Gambling Enforcement Act of 2006, I don&#8217-t see how a lean InTrade could do.
  6. InTrade CEO John Delaney is not a truthful person. It is unlikely that any statement from him about the viability of InTrade should be taken seriously.
  7. Midas Oracle used to received many daily server requests from the InTrade-TradeSports team in Ireland. The recent web stats show a sudden drop. This might signal that some key employees are in vacation &#8212-or have been laid off.
  8. UPDATE: They seem now unable to expire a contract in the evening, Irish time.

TAKEAWAY:

  • The InTrade traders should prepare themselves for the worse &#8212-the sudden closure of InTrade.

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Chris F. Masse

The InTrade traders are wondering what the future of InTrade is -now that TradeSports has bellied up in style.

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Here are the screen shots of their posts &#8212-before they get removed.

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Previously: on TradeSports death – on InTrade&#8217-s viability

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The InTrade predicton markets on the viability of InTrade are *STRUCTURALLY* designed to *DETER* any InTrade trader from betting on the negative side of the issue.

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Link via Jason Ruspini

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Previously: The InTrade predicton markets on the viability of InTrade won&#8217-t reveal *ANYTHING* about the future of InTrade.

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The InTrade predicton markets on the viability of InTrade wont reveal *ANYTHING* about the future of InTrade.

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It is impossible for any InTrade trader to know whether the financial accounting of InTrade is sound or not. Any commercial company surrounds itself with secrecy. Let alone an Irish company that illegally (from the DOJ&#8217-s standpoint) exports its services to Americans.

UPDATE: See the comment #1 there.

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It was impossible for the InTrade traders to divine whether Yahoo! CEO Jerry Yang would step down.

(In passing, note that InTrade has expired this contract hours after the breaking news hit the wires.)

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It was impossible for the InTrade traders to divine whether Unlawful Internet Gambling Enforcement Act of 2006 would be voted and enacted.

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The InTrade predicton markets on the viability of InTrade won&#8217-t reveal ANYTHING about the future of InTrade. It will just aggregate InTrade&#8217-s PR output.

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As for the &#8220-business development initiatives&#8221- planned by the InTrade executives, I wish them the best of luck. However, I remain skeptical, since I don&#8217-t see what can replace the 2008 US elections in terms of attractiveness &#8212-now that the SuperBowl has been sacrificed.

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My open challenge to InTrade CEO John Delaney

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InTrade CEO John Delaney:

Our #1 untapped resource is the vast collective intellect that we have only started to use. Harnessing the &#8220-wisdom of the crowd&#8221- has a very big potential role in improving all of our lives. If we do it, we all have a voice and will feel part of the solution as well as the problem. We can solve some wicked problems, like climate, resource, growth, social, and economic challenges. In simple terms, there exists between us the best information on how we solve our key challenges. If our leader’s embrace and permission new systems like prediction markets to operate in a transparent prudent way I am convinced that we can contribute in no small part to the solution.

Recall, that US Department of Defence believed a prediction market could provide valuable information on growth, risks and social issues. Hundreds of academics, dozens of Fortune 500 companies, and millions of people believe that prediction markets can help provide valuable information on economic, financial, social and environmental issues.

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I have already expressed my deep skepticism for this kind of grandiose discourse.

Today, if I may, I would like to ask these questions to John Delaney:

  1. We have just experienced one &#8220-wicked&#8221- problem, recently &#8212-the credit crunch crisis. Can you demonstrate that InTrade was &#8220-part of the solution&#8221-?
  2. Speaking of the credit crisis, for instance, what makes you think that InTrade can be &#8220-part of the solution&#8221-, whereas it is now documented that the World Economic Forum (a.k.a. Davos), where 2,500 &#8220-global leaders&#8221- gather each year, have failed miserably in raising interest for the speakers who were talking about this (then, looming) financial crisis? Is InTrade really stronger than Davos?
  3. Would you mind giving us specific instances, taken from the past 12 months, where the InTrade prediction markets were of high social utility to society?
  4. Can you cite the names of some research scientists who are endorsing the idea that the real-money prediction markets (from either InTrade or BetFair) &#8220-can contribute in no small part to&#8221- the solutions to the world&#8217-s &#8220-wicked problems&#8221-?
  5. What would you respond to those who say that, during the 2008 US presidential election campaign, the InTrade prediction markets sucked up to Nate Silver?

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Here are my thoughts:

  1. I agree with InTrade CEO John Delaney that prediction markets are interesting, but I disagree when he suggests that they are radical tools &#8212-they are subtitle tools, actually.
  2. I agree with InTrade CEO John Delaney that prediction markets are (somewhat, I would say) useful to society &#8212-but the demonstration should be done using Robin Hanson&#8217-s guidance.

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APPENDIX:

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What Nate Silver predicted:

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What InTrade predicted:

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2008 US electoral college: What I am betting on.

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PollTrack:

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I like the way they color this electoral college map &#8212-with 5 colors only (simplicity is good). It is very clear and usable, I believe. You can see 6 states in gray (&#8221-too close to call&#8221-). I am heavily betting on Barack Obama for Florida and North Carolina. There will be a good payoff, next Tuesday &#8212-maybe. :-D

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Price for Alabama - Florida at intrade.com

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Price for New Jersey - Rhode Island at intrade.com

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Who will win Florida in the 2008 Presidential Election?

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Who will win North Carolina in the 2008 Presidential Election?

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Explainer On Prediction Markets

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A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 60 times out of 100, the favored outcome will occur- and 40 times out of 100, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism &#8212-with or without an automated market maker.

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that the traders bring when they agree on prices. These event derivative traders feed on the primary indicators (i.e., the primary sources of information), like the polls, for instance. (Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-) Armed with these bits of information, the speculators then trade based on their anticipations, which will be either confirmed or infirmed. Hence, the prediction markets (which are more than just an information aggregation mechanism) are a meta forecasting tool.

The value of a set of prediction markets consists in the added accuracy that these prediction markets provide relative to the other forecasting mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining these prediction markets, relative to the cost of the other forecasting mechanisms. According to Robin Hanson, a highly accurate prediction market has little value if some other forecasting mechanism(s) can provide similar accuracy at a lower cost, or if very few substantial decisions are influenced by accurate forecasts on its topic.

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More Info:

– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts

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More Charts Of Prediction Markets

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At inception, I created an Internet usability category, and, since, I have published many Jakob Nielsen stories. Many wondered why I would bother. Now, the Midas Oracle readers can understand why.

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These traders are talking down the newly redesigned Hollywood Stock Exchange website.

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[They guy above has misspelled, two times. He meant: “unusable“.]

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Previously: #1 – #2 – #3 – #4

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UPDATE: Traders talk on Twitter about HSX.

Thanks to the HubDub guy for the tip.

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How to break a successful prediction exchange in less than one week

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Whiskey Kilo (a Hollywood Stock Exchange trader):

Change is one thing, breaking the whole site and acting like its nothing happened is another. The whole concept of trading movie stocks, movie bonds and options have taken a backseat to making sure you can blog, add friends, and “Schmooze”.

The old portfolio page was color coded and extremely easy to understand, you instantly knew if you were making H$ or losing your shirt. Now the current portfolio page is a small box, one colour, light grey on a white backround and the type is half the size of the font here, also you can only see 12 stocks at any given moment. Whoever OK’d this part of the site has to have never traded any shares online before.

From what I can gather, there was a beta version of this 3rd generation of the game, but no one paid any attention to the any of the feedback, two days after this new rollout, HSX.com started calling this new version a beta game, and what HSX staff there is say that portfolios are now their priority. However the only things that really work right now are the blogs, which pay H$10,000 a posting, adding friends pays traders H$1000, Online Polls, and Schmoozing. which paid initially H$1000, but now pays H$100 per reply. The only reason I see for paying traders to blog is to bring more eyeballs to the garish 728?90 and 300?225 ads on each page to pump the number of advertising views on HSX. But if this is part of the grand scheme here, I can’t see Gold coin or Forex advertisers closing sales from a bunch of 13 years because all the veteran traders have left in disgust.

I welcome Jed [*] to read the HSX Support page: http://www.hsx.com/cms/forums/support and look around, I shudder to think this all is going to be a B-School case study on how to kill a successful site in under a week.

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[*] Jed Christiansen, who put up a comment in defense of HSX (Jed systematically defends the people I slam on Midas Oracle) &#8212-and who has just begun an MBA education.

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Can InTrades prediction markets really contribute to solutions in avoiding future [financial] crises?

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The World Is Flat.

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To the question asked in the title of this post, some have answered by the affirmative (&#8220-Prediction Markets Have a Big Role to Play&#8221-). In my view, it is wrong to overvalue the real social utility of the prediction markets.

As of today, we can plainly see 2 things. Number one, the prediction markets are a tool of curiosity. People have heard about InTrade thanks to numerous news articles (where some prediction market researchers who get the InTrade historical data for free pump up the prediction markets as God&#8217-s right arm on Earth). At crunch time, the people teased by all this publicity flock to the InTrade website to satisfy their curiosity about the state of the horse race. Number two, a subset of the general population (made up of educated people who believe in the virtues of markets) use the prediction markets as a tool of convenience. Instead of spending long hours reading the various outputs by the pollsters and the commentariat, these people just check InTrade on a daily basis, because they know that it is primarily (but not only) an information aggregation mechanism. InTrade sums up the news of the day, so to speak. Hence, these people (in the know about how to benefit practically from the wisdom of crowds) don&#8217-t have to spend time gathering and analyzing the news of the day.

To the question asked in the title of this post, I&#8217-ll answer &#8220-no&#8221- &#8212-unless one of my readers can educate me more about the following issues:

  1. Did InTrade set up a set of prediction markets, in the summer of 2008, aiming at forecasting the (then) &#8220-upcoming financial crisis&#8221-? I am afraid that the answer is &#8220-no&#8221-.
  2. Did the World Economic Forum (a.k.a. Davos) manage to open the eyes of the 2,500 so-called &#8220-global leaders&#8221- (a grandiose denomination that includes many of the Wall Street CEOs, and, yes, some financial bloggers like Felix Salmon, invited to that Swiss annual grand Mess of the capitalism) about the financial instability that was already perceptible in the recent years? I am afraid that the answer is &#8220-no&#8221-. Now, ask yourself: If Davos can&#8217-t, what makes John Delaney think that he can?
  3. Is there out there at least one expert (by &#8220-expert&#8221- I mean any professional other than the so-called prediction market experts who are expert in nothing else than pumping up the prediction markets) who can demonstrate clearly that the prediction markets in his/her vertical have helped tremendously in his/her pursuit of creating long standing wealth? I am afraid that the answer is &#8220-no&#8221-.
  4. How come nobody called bullshit on InTrade CEO&#8217-s grandiose statement?
  5. How come Jason Ruspini, usually so critical, has become as servile as a poodle?
  6. Is Robin Hason the only adult in the field of prediction markets?

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I Told You So. - by Ed Miracle

I Told You So.

by Ed Miracle

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