Everything else about the conversation highly suggested that John was very intelligent, and knew how to keep his cards close to his chest.  I’m just not a type of person that you can develop a 10 minute relationship with as I don’t like introducing people I’ve known for 10 minutes to others without some form of knowing the person I’m dealing with isn’t going to annoy my contacts.  For all I know, he could drill those people I would have referred to him for their contacts, etc.  This would look bad upon me for making the introduction in the first place.

About margin trading, I know one of the major price spikes (down) on Obama was caused by a major liquidation from a margin trader that I know of.  This person dealt with a 5-digit account.  You are right, however, that closer to the election day they scaled the margin, so I have no way of substantiating the claim they lost money.  However, consider that if there’s $10k of bad debt, 250,000 contracts need to be traded to re-claim that bad debt.

Chris Masse: I think your strategy of sending emails out of the blue says something.  You asked for opinion, and not people’s rolodexes, an important difference.

http://www.cro.ie/search/submissionse.asp?number=436732&BI=C

Feel free to purchase the annual report and get a better look at Intrade.

I know Intrade took margin-related losses in mid-2007, but it’s a little surprising if they had more recently because one would think that all margins would have converged to worst-case loss well ahead of the election.

Betfair, you know this company, is under fire again. Quotes from betdaq today - you know this guy, it is Ed Murray, also known as DJ Sunset. And he’s on a roll.

“Something which isn’t widely known is that last year (2007) was i believe the start of betfair restricting the size of bets certain customers can place on certain markets. this happened with their tennis markets.

Yep, sounds like betfair alright. This will happen, IMO.
“when hammersmith read this thread tomorrow and spend the day writing emails to betdaq pressuring for me, adonis, laylow, jd007, and anyone else who has dared to write anything on this forum (with the “everything everyone has posted is appalling fibs/libellous/slanderous etcetera, but no we’re not going to take people to court over it because we think we’d probably lose, we just want them all censored” stuff)…..”

Right again, DJ.

Let’s see if this link works so I can annoy betfair some more.
http://forum.betdaq.com/Topic21169-10-3.aspx

Everything you say gets thrown out the window when the concept of margin is introduced.  Also, the analogy to the NYSE is not true since the NYSE only facilitates the trade, they are not the counterparty.  Intrade facilitates the trade and is the counterparty.

Intrade’s margin system failed to properly account for event risk.  For example, let’s pretend on the Obama democratic nomination contract you could use 50% margin.  And let’s assume you had two accounts with $1,000 each, both on margin.

Account A sells 4000 contracts of Obama at 50%, account B purchases 4000 contracts at 50%.  Obama announces he’s quitting.  Contract settles at 0 before there is an orderly liquidation.

Account A has a balance of $3000, representing $1000 of initial equity and $2000 of gains.  Account B is at negative $1000, representing $1000 of initial equity and $2000 of losses.

Tell me that Intrade will be able to collect that $1000 from the account B. If Account A then decides to withdraw $3000 from his/her account, Intrade only has $2000 of equity to back that withdrawal – it has to come up with an extra $1000 from internal funds since the chances of collecting from B is very small.

You can see why they cut margin trading – too much of this was happening.  Without margin, then they can make guarantees like the one you mentioned, but at significant loss of liquidity.