WEB EXCLUSIVE: How the US prediction market scene will look like after the CFTC ruling on “event markets”

I have read many times the CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts… notably how they define “event markets”, how they are going to extend their “exemption” to other IEM-like prediction exchanges, and how they framed their questions to the public to make sure that we don’t talk them in about sport event derivative markets, event derivative markets that could be used for hedging, and for-profit prediction exchanges.

-

So, here’s how the US field of prediction markets will look like just after the CFTC ruling on “event markets”:

1. Private prediction markets (a.k.a. enterprise prediction markets) will be protected —maybe.
2. Instead of having only one legal, US-based, generalist prediction exchange (the Iowa Electronic Markets, a.k.a. IEM), we will have plenty —as long as they are not for profit, don’t organize any prediction markets on sports, and can’t be used for hedging risks.
3. US-based HedgeStreet (and the other financial prediction exchanges that would be created in the future) will be segregated from the generalist prediction exchanges (see point #2) based on the hedging capability criterion.
4. Offshore prediction exchanges InTrade, TradeSports and MatchBook will remain illegal, from the perspective of US laws.
5. BetFair, which is a prediction exchange that respects US laws (and all laws and ethical codes in general), will still decline to export its services to the US residents.

-

Overall, the CFTC ruling on “event markets” will bring only 2 small changes (point #1 and point #2) to the US prediction market scene.

-

The idiots who told us that the Messiah was coming are just that —idiots.

-

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

-

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.

-