We’ve just opened a Web site called Foretal. When we started out three years ago, we didn’t expect to end up building a prediction gaming platform. We wanted to make an entertaining Web site where the content was driven by events in the real world and how people interact with them – a blend of fact and fiction that people would create as they participated in the site. Inevitably, we simplified the idea and settled on the concept of a place where people could create a map of the future — a place to post predictions and check out the predictions of others.

Given that my partner Yoshi runs a hedge fund and worked in the City of London for a long time, a prediction market might have been the obvious format to develop. We decided against this early on. We wanted our site to be a place for anyone to make a prediction about the world we live in. Prediction markets, in the way they are designed currently, feel technical. You need to understand jargon, and mathematical, financial concepts. We felt this would be a barrier for what could be a mass-market idea. I’d been involved in setting up the BBC’s first Web site back in 1994, and had since gone on found, develop and sell a company which delivered interactive technology solutions to TV broadcasters in the UK. We did a lot of voting applications for big shows like ‘I’m a Celebrity’. I know a thing or two about how hard it is to make interactive technologies simple. I also knew that voting was something that everybody understood. So, voting was chosen as the basic element of user engagement. We reward everyone who votes for free on a prediction a free credit. With five free credits you can propose your own prediction that something will happen by a given date. For three credits you can also add a supplemental prediction to anyone’s prediction; if this happens, then something else will or won’t happen.

If you are feeling bold, you can pay a small fee to upgrade your prediction to a ‘free and cash prediction’. This has two distinct ballots going on separately and in parallel, one where it isn’t costing the user anything, and the other where each vote costs €1.00. You can only vote once for free on any prediction, but you can vote for cash as many times as you want, either yes or no or both. When Foretal declares an outcome, all the losing cash votes are distributed to the winners according to how much of the winning ballot they own. If there were 100 cash votes on the winning side, and you had placed 10 of them, you would win 10% of the losing cash votes. The predictor wins a commission of 3% from these losing cash votes, regardless of the outcome.

A key twist on this is that the event must be recorded in two out of three web sites you select when making the prediction. Two of these have to be from a pre-selected list which includes web sites for the BBC, CNN etc. In other words, we are setting the standard of prediction-worthy event high and are not interested in whether someone can drink ten pints on Friday night. Our site handles cash, and therefore we felt we needed a gaming license. While we’d developed the business through an Irish company because I live in Ireland, we couldn’t get regulated there because legislation is way out of date. After some considerable research (at a time when the US federal authorities were slamming down on this area) we decided to establish the operational business in Malta, a full EU member, with a Lotteries and Gaming Authority that has the most advanced on-line gaming framework in the world. They have put us through exhaustive due diligence and we have improved as an offering as a result. Unfortunately our US friends can’t take part in the cash side of things. Yet.

Clearly generating a community of active participants is vital to the project’s success. There is a bunch of social features, including leaderboards, discussion groups and so on, and we are looking at ways of enabling self-organising groups of people to conduct private or restricted predictions as well. The list of desiderata is very long, but initially, we want the site to be clean and clear, and we hope you find http://www.foretal.com just that. There are a lot of things we haven’t been able to model. What effect, for example, will the ‘odds’ created by the free prediction voting do to the ‘odds’ of the cash voting? Will tote-like cash voting produce an auction dynamic, a little like e-bay, where only the inexperienced bet early on high priced items? Will it work at all? Will you stay in the game, adding cash votes to maintain your share of the losing ballot, provided the losing ballot is worth having? Will the cash voting tend to oscillate over time around 50:50? Could you ever actually win a lot of money? What are the drivers for free predictions as opposed to cash predictions? And, most importantly, does the site offer any degree of accuracy about future events?

Please let us know what you think about the site, its format and design, but best of all, make some predictions, and vote on the predictions of others. Our job will be to ensure that the declaration of outcomes is handled promptly and accurately, and thus build up the site as a place of reference and record.

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