Comments on: What to think of HedgeStreet’s comment to the CFTC

By: Jason Ruspini

Jason Ruspini — Sun, 13 Jul 2008 16:37:37 +0000

It’s not a major point, but on another reading, the following statement from Hedgestreet is pretty misleading: “Election contracts, which are in the nature of binary options, would be within the Commission’s jurisdiction even if the related event was not a ‘commodity’ for the purposes of the Act.” Taken in isolation, this is false. The CFTC has jurisdiction over all exchange-traded commodity options, but could not pursue enforcement against non-commodity options as Hedgestreet implies. Per 7 USC Section 6c(b), not the section that Hedgesteet quoted in edited form, the CFTC has the power of approval over DCM-hosted options, and in that sense has extra authority over options.

By: Chris F. Masse

Chris F. Masse — Fri, 04 Jul 2008 19:42:29 +0000

@Jason Ruspini: Good to hear that.
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I like their main idea, but would add something to what they say.
DEVELPING…

By: Jason Ruspini

Jason Ruspini — Fri, 04 Jul 2008 19:13:46 +0000

This is a great recommendation. For the first time in public, in writing, we get a strong message that Hedgestreet wants to run election markets. Their proposal is very similar to mine although less comprehensive because they steer clear of gaming law pre-emption issues. (In that regard, it’s uncertain how much of a help their reference to the CFTC’s non-commodity option authority was.) Their focus on DCM election markets is admirable though, and they came to the same sorts of conclusions that I did regarding trading prohibitions. I recommend that Hedgestreet gets a trading prohibition infrastructure in place as soon as possible.

By: The CFTC is going to close the comments in 3 days. We have 3 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Ins

Fri, 04 Jul 2008 10:52:23 +0000

[...] - Analysis of the HedgeStreet’s comment sent to the CFTC. [...]

By: Medemi

Medemi — Fri, 04 Jul 2008 08:31:02 +0000

There are some exceptions to the rule - some really decent folks hanging around at the exchanges. But most of them won’t survive and eventually submit to the betfair way. “I’m a cheat and proud of it” is what you’ll hear on a daily basis and have to get used to when you choose to hang out at the exchanges. Eventually organized crime will get a foothold on the exchanges. I have to laugh when I see some of these investigations looking into insider trading and the suspicious betting activity that is (supposed to be) visible to the eye. I could be their best friend if I wanted to. The future and success of betting exchanges in the UK will be dependent on the inventiveness of the crooks, and with betfair jumping like mad men to try and keep this iceberg below surface, I’m not very confident about the future.
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This is not America.

By: Medemi

Medemi — Thu, 03 Jul 2008 23:40:17 +0000

Indeed, one can point that it’s IEM, InTrade and BetFair who have grown the field of prediction markets —not HedgeStreet.
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If it’s liquidity you want, you should offer the public a chance to rip each other off massively on sports and stupid games which doesn’t involve knowledge or anything of social value. After all, everyone prefers to believe he’s smarter than his neighbour. Humans are a bunch of idiots. Exploit it. If you understand about how wars are started, you are likely to succeed in running a sports exchange as well. That’s why it was all invented in the UK in the first place.
But that’s sports, and nobody gives a shit if the price is right as long as you can make some money.