Why HubDub won: Google loves HubDub, and the Google users love what HubDub produces.
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Tag Archives: InTrade
InTrades prediction markets on skyscrapers
– the opening date of the Freedom Tower in New York-
– the opening date of the Chicago Spire.
I like that. I remember requesting this kind of prediction markets two years ago, to another exchange —-to no avail.
Exchanges should create much more delivery date prediction markets —-about buildings, cars, software, etc.
Get Rich Quick – InTrades new marketing trick
Buy John McCain at the end of 2007 (at around 5), sell high in 2008 —-and get rich quick. That is what Bethan and her husband (Jonathan) did.
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Today, InTrade CEO John Delaney is trying to milk out this get-rich-quick story (or a similar enough story). His message: You, too, can get rich quick…- —-what it takes is just registering your credit card with InTrade. 
What the InTrade CEO doesn’-t tell you is that luck was a factor in Bethan’-s sudden enrichment. Nothing wrong with tapping chance —-but honesty should have prompted John Delaney to mention it. And you will notice the absence of information for the x axis (the time). Marketing and honesty are 2 words that don’-t mix well in Ireland.
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ADDENDUM:
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Who needs pundits track records when we have prediction markets?
Emile Servan-Schreiber:
Mr. Kristof, if you want to keep yourself accountable and track the success of your predictions in the long run and in real-time, why not simply participate in a prediction market such as NewsFutures?
You could suggest that particular stocks be listed in relation to particular new stories and their possible outcomes. Then, as you invest in particular outcomes, your prediction portfolio would either grow or shrink, providing us all with an objective measure of your foresight. You could feature on your blog a widget displaying in real-time the “-net worth”- of your various predictions.
Other advantages of this approach would include:
– Forcing a detailed specification of possible outcomes-
– Having you compete directly (bet against) the general public-
– Measuring how much your columns can influence price movements for various predictions-
– Leading by example to show other pundits how it’-s done.
There are various types of prediction markets out there, so you can pick the venue where you’-d feel most comfortable:
– Play-money only, like NewsFutures– [or HubDub ]
– Real betting (illegal) like Intrade-
– Charity-driven, like Bet2give.
If the idea intrigues you, please contact me at [email protected] and we can get you started right away!
Emile Servan-Schreiber
CEO, NewsFutures
Excellent.
Readers, do click on the link (which will bring you to the New York Times), and do click on “-Recommended”- under Emile’-s comment —-so that his pitch for the prediction markets will be more visible to all the people reading the comments there. Thanks. Appreciated.
Patrick Young = The InTrade co-founder you never heard about
The greatest benefit of being the most popular blogger on prediction markets is the private e-mails I get from all the corners of the globe. I come to meet, over the Internet, the world’-s finest luminaries —-from the Academia or from the entrepreneurial world.
Now, try to guess who that guy is:
- He wrote about prediction markets (before that moniker was applied) and betting exchanges in his book “-Capital Market Revolution!“-, published in 1999 —-while Andrew Black was developing BetFair.
- He co-founded GSX/Tradesports/InTrade in 2000.
You have probably never heard of him…- but you should compute him starting today —-Patrick Young. And, of course, he blogs and twitters…- Don’-t miss his ultra-copyrighted podcast on the “-fascinating”- American Civics Exchange…-
Scrutinizing InTrades financial statement for 2008 – Part II
Jesse Livermore (a pseudo):
More Intrade Financials
I paid 7.50 euros to see Intrade’-s full filings from 2008 at www.cro.ie. I’-m not going to post them publicly, because they contain the names and addresses of everyone who owns shares in the company. (Fun fact: John Delaney’-s address does not have a number, it has a name.)
A few new pieces of information:
-How can Intrade keep losing money? Like any other startup, by issuing new shares. Intrade issued $2 million in new stock last year. About 320,000 shares were issued, on a base of 1.2 million shares, which would value Intrade at about $10 million, the same as my ballpark estimate yesterday.
-I was correct about the valuation of the Tangible Fixed Assets. Intrade valued anything left over from Trade Exchange Network at $0, and depreciated computer and software equipment by 33% of the purchase price per year.
-The report does not break down expenses and revenues in great detail. It tells total employee compensation, and interest income, but does not spell out commission revenue or other expenses.
-Trade commissions are (properly) recognized only when they are paid. Trading fees are paid when trades are made- expiry fees are paid when contracts expire. Intrade likely recognized a good deal of revenue on election day, which at least mitigated their losses.
I don’-t view this with the shock of some on the Intrade forums. These numbers seem entirely reasonable to me. Intrade has grown substantially comparing 2004 to 2008, and even in the absence of legislative change, will probably be profitable in 2012. I’-m not going to short the contracts on whether Intrade will still be in business. Even in the unlikely event that Intrade were to close, there is no reason to worry about customer deposits.
Part I
The InTrade numbers
The fact that Inkling needs five bullet points and a graph to explain short selling is a good indication it’s too complicated.
That was Jason Trost’-s comment.
But see, first, Chris Hibbert’-s comment:
My main complaint about using the “short-selling” terminology in prediction markets, is that it uses a term from finance that describes a complicated scenario to describe a simple scenario it doesn’t apply to. In financial markets, short selling means that you accrue money in order to take on a conditional obligation. When you bet against a proposition (on InTrade, Foresight Exchange or (I think) Inkling), you spend money and gain a conditional asset. In the prediction market case, you don’t have any further obligation- there’s no possibility of a margin call. The asset has a non-negative value.
I actually think the way NewsFutures describes binary outcomes is the simplest. They never talk about selling unless you already own the asset. If you don’t own any of the asset, you can either buy it, or click a button to see the opposite view, which you can also buy. They don’t have “yes” and “no”, they just have complementary wordings and titles for opposing outcomes.
Go reading all the comments, there.
Blame the messy CEO -dont blame the media.
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Nothing is more untrue than that.
I do report things —-bad things, and good things (like the NKM scandal, which “-StrangeLove”- alluded to).
I give my opinions —-and I link to or re-publish other people’-s opinions.
If the coverage of InTrade has not always been positive, it is due to the *illegal* nature of their business and the many marketing and P.R. *mistakes* that (former accountant) John Delaney made —-you might remember that he acknowledged some of those.
As for BetFair, and you might remember that I criticized them in the harshest terms at times, the truth is that they are the most polite, correct, professional and ethical people in the worldwide prediction market industry.
Scrutinizing InTrades financial statement for 2008
Jesse Livermore (the ‘-nom de plume’- of an InTrade trader):
Now THIS is interesting.
Midas Oracle has obtained the shareholder reports for Intrade. Links here, here, and here.
I do quite a bit of investing in the stock markets and read plenty of financial statements, so I feel reasonably qualified to comment. Keep in mind that Midas Oracle does not have the full documents, so there are footnotes which might be materially relevant.
Highlights:
-Total member funds on deposit were about 7 million euros in 2006 and 2007 (for the combined Tradesports/Intrade entity), and $14 million for Intrade alone on September 30th, 2008. Reassuringly, members’- funds are properly segregated and listed as both assets and liabilities.
–Intrade currently has about $1.2 million in cash net of debt. They list only $11,692 as Fixed Tangible Assets. That’-s the category that includes computers, servers, office furniture, etc. I suspect this is low because of accounting rules. The value of tangible goods is generally amortized over a period of a few years. For example if you buy a computer, it will lose value over time, even though it does the same job it always did. The amortization rate varies, but a typical method might have computers lose 1/3rd of their purchase price each year.
–Intrade/Tradesports has lost money in all of these years. 950,000 euros in 2006, 1.4 million euros in 2007, and $800,000 in the first 9 months of 2008. This seems to have everyone in a tizzy, but I don’-t see anything to worry about. 1) The last 3 months of 2008 were probably the most profitable in the site’-s history. Election trading really zoomed up, plus they got all the expiration fees once the election finished. Not sure if that put them in the black for the year, but it was probably a profitable quarter. 2) Intrade is really a start-up. Sure, they’-ve been in business in various forms for several years, but there’-s the potential for massive growth in the future. In particular, when the legal status of prediction markets is clarified, their user base could grow very quickly. If UIGEA is repealed or amended, or if the CFTC certifies their legality in the US, they could eventually grow to be like the NY Stock Exchange or Chicago Mercantile Exchange, which are valued in the hundreds of millions of dollars. Bottom line, it makes sense for the directors to continue to lose money at this stage in the hopes of a huge payoff later on.
-There is no accounting at all for the intangible assets of Intrade. The Intrade brand name is valuable. When the Economist or any other media source wanted to estimate the odds for the presidential election or any other current event, their first stop is not Hubdub or Predictify or any of the other play-money sites, it’-s Intrade. For real-money current events betting, it is the first and last place to go. If Intrade were sold, I would expect it would go for a large multiple of its book value, maybe in the $10 million range or above.
InTrade CEO John Delaney: Midas Oracle is welcome to publish our financials. I am glad that bombastic gadfly did it.
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The InTrade documents:
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I have obscured the personal addresses of these 2 persons:
