First, the Financial Times —-and, now, Freakonomics.
The journalistic rule should be that, if you cite one prediction exchange, you should cite the one that is the most liquid on the market you are writing about. For UK politics, it is clearly BetFair.
BetFair has clearly a PR problem.
This is really stupid. The decerebrated journalos at the FT chose to feature the illiquid, Ireland-based, un-regulated InTrade prediction markets instead of the very liquid, UK-based, regulated BetFair prediction markets on the next British congress.
Makes no sense at all.
The BetFair PR boys have an omelet on their face. They should work harder.
DISAMBIGUATION: The “-illiquid”- adjective refers to the UK political markets on InTrade —-not the US political prediction markets.
My dear honorable Carlos Graterol,
I acknowledge you are a little InTrade fanboy, and that flies OK in my book. You say there are 3,000 daily transactions on the daily DJIA prediction markets. (It was much higher than that before the CFTC fined InTrade.) While I reckon that this liquidity is enough to generate trustworthy predictions, it is very small compared to the liquidity of the financial markets or BetFair’-s liquidity. For your information, BetFair handles more transactions than the London Stock Exchange. InTrade’-s liquidity is small compared to BetFair’-s, and is certainly too small to generate profitability. That’-s what counts.
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Michael Giberson (professor of economics and chairman of our scientific advisory board):
Actually, I would expect the change to improve liquidity, but the real surprise for Ed Murray is that other than his liquidity argument, I pretty much agree with him this time.
It is a better scheme than before, as the exchange will match traders’ bets more efficiently and offer price improvement when available.
As Betfair observes (and Murray notes) the downside is for traders who make a bet in error, and now find the more efficient market has matched the bet before it could be withdrawn. If this is a frequent problem for a trader, perhaps they need to exercise a little more care at the keyboard. But as the Befair announcement indicates — and this time Ed Murray is repeating the Betfair company line! — at least there is the possibility that the trader will be matched at a better price than he would have otherwise.
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