Daily Archives: September 11, 2008

One day after BetFairs PR move, the very active event derivative traders are still very displeased by the new BetFair premium charges.

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I have re-published yesterday&#8217-s BetFair Q &amp- A at the bottom of my previous post &#8212-because that&#8217-s the post that Google features, bringing in 300 people a day.

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My analysis of this PR debacle:

  1. BetFair has a very complex information technology system, which is very costly, making BetFair less profitable than the fixed-odds betting operators (the big British bookmakers). They attack the problem with a dual approach: they try to lower the IT costs associated with each bet transaction (see FlyWheel Lite), and they try to spot and exploit their most costly customers (hence the premium charges).
  2. BetFair&#8217-s PR department is made up of friendly, knowledgeable and competent people. However, they are not up to date with BOTH the brand-new web publishing tools AND the brand-new behaviors associated with these tools. In other words, they don&#8217-t grasp the Web &#8212-where velocity and interactivity are 2 factors. Hiring a SEO is not the solution. BetFair should embrace the culture of the Web.

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A FaceBook group has been created to protest the new BetFair premium charges.

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Here are some BetFair traders&#8217- takes:

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UPDATE:

A list of the Betfair forum threads about the new premium charges.

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Intrade 2008.PRES.McCAIN > PRESIDENT.REP2008

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How frequent are arbitrage opportunities such as the following?

In addition to title, the reverse is true of OBAMA/DEM.

Do traders really think there&#8217-s some probability of McCain being elected as an idependent and Obama being replaced as the Democrat nominee?

2008 US Elections Prediction: John McCain is now the favorite at InTrade, while all the other prediction exchanges still have Barack Obama ahead. Is InTrade quicker to incorporate the latest polls because of the bigger liquidity of its prediction markets?

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#1. Explainer On Prediction Markets

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Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.

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More Info:

– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts

– Prediction Market Science

– The Midas Oracle Explainers On Prediction Markets

– All The Midas Oracle Explainers On Prediction Markets

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#2. Probabilistic Predictions = Charts Of Prediction Markets

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Put your mouse on your selected chart, right-click, and open the link in another browser tab to get directed to the prediction market page of your favorite exchange.

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2008 US Elections

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InTrade

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2008 US Electoral College

2008 Electoral Map Prediction = InTrade – Electoral College Prediction Markets = Probabilistic predictions for the 2008 US presidential elections based on market data from InTrade Ireland = electoralmarkets.com

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– This is a dynamic chart, which is up to date. Click on the image, and open the website in another browser tab to get the bigger version.