Will the CFTC allow FOR-PROFIT prediction exchanges to deal with “event markets”?

Chris F. Masse June 19th, 2008

The feedback I have received about my speculative post is that I put too much weight into the CFTC requesting that the prediction exchanges organizing “event markets” (event derivative markets that can’t be used for hedging risks) be not for profit —as the Iowa Electronic Markets is.

Just below, in bold, are the phrase and the word I’m told I have mis-read.

CFTC - (PDF file):

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts

D. Legal Implementation

16. Is it appropriate for the Commission to direct certain or all event contracts onto markets that are regulated differently from and perhaps less stringently than DCMs? For example, it may be warranted or necessary to treat event markets that aggregate information solely for academic or research purposes, event markets set-up for internal corporate purposes, or event markets that offer exceedingly low notional value contracts to traders differently than markets that possess the attributes of traditional DCMs.

19. What are the benefits and drawbacks of permitting certain event markets to operate pursuant to Commission established conditions that are similar to the conditions under which the IEM operates?

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

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

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.

Tags: bet markets, betting markets, binary options, CFTC, event contracts, event derivative markets, event derivatives, event markets, Explainers, prediction markets, real-money prediction markets