Hidden this morning deep into The Sunday Times:
Betfair, the online sports-betting firm, has invested ?10m to launch Tradefair, a new subsidiary company specialising in bets on the financial markets. It believes that the market for financial betting could exceed ?400m. [*] Tradefair will operate independently of its parent. [**]
?10 million = $20.3 million = €13.9 million —- [Thanks to David Pennock's Yahoo! Currency Converter. ]
[*] BetFair and TradeFair traders share the same BetFair account, as I understand it.
[**] I suppose (based on BetFair’-s share of the UK betting market) that TradeFair wants 5% of that (for a start) —-so that would be ?20 million. —- But we don’-t know what that ?400 million figure came from, in the first place. David Jack’-s wet dreams? For the UK market only (in an increasingly global environment for exchanges)? For what year exactly? 2008? 2026? Mystery. Of course, no source is cited.
Previously: Binaries and Spreads: BetFair spins off TradeFair. + Meet David Jack, the managing director of TradeFair. + TradeFair Binaries User Guide – What is Trading? + BetFair’s Global Warming Prediction Markets — CFM’s Views + Why does Tradefair care about Prediction Markets – by TradeFair’-s David “-$20 million”- Jack – 2007-12-06
Are prediction markets good at providing a true measure of probability?
Crowd theory says yes, business interests may complicate things.
How is accuracy obtained?
Well of course the answer is obvious – if you want an accurate measure of probability look at the fundamentals for yourself and then ask a lot of people for their opinion. If you encourage the participants to put either reputation and/or money at risk their prediction skills get better. If you provide a platform where systems can participate as well as individuals then not only is the best assessment of probability obtained but it becomes highly dynamic and shifts with every small change in the underlying markets/world conditions.
Sounds complicated, but what does this mean for a business?
Well, simply build an exchange that can provide unprecedented capacity and let the world decide what the likelihood is of an event happening.
And who are Tradefair?
Tradefair is Betfair’-s new home for the financial bettor and trader – our binaries exchange product has opened with straightforward traditional financial markets (FTSE up/down) but one of the things that excites us hugely is the inclusion of market types such as Interest Rates. We call these the “-unhedgeables”-, markets that we all have an opinion on, all understand some of the fundamentals but don’-t have the safety net of an underlying market to hedge into. We are starting in a modest way but we firmly believe that the ONLY place that true market sentiment can be measured is on an exchange.
Why does Tradefair care about prediction markets?
Take a look at Betfair today – it has some of the most liquid, volatile and high participation prediction markets in the world. Participation drives the price down and provides fantastic value to our customers. This has allowed us to build a business that we are all really proud of. The Tradefair team believe that by focusing on financial markets, delivering exchange technology that allows mass participation in an accessible, highly available and transparent manner will allow us bring that same value proposition to the financial sector.
David Jack is on the right…- (here with Andrew “-Bert”- Black, the BetFair co-founder).
David Jack (Managing Director of TradeFair, a BetFair spin-off)
Previously: Binaries and Spreads: BetFair spins off TradeFair.
NEXT: Why does Tradefair care about Prediction Markets – by TradeFair’-s David Jack – 2007-12-06
Via “-jwolstenholme”- and via Niall O’-Connor, who got the scoop, here’-s UK-based TradeFair (Binaries and Spreads):
–->- David Jack (Managing Director of TradeFair) —- (Thanks to Niall for the LinkedIn link.)