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External Link: TradeFair

The Telegraph

TradeFair is seeking the British FSA‘s stampf of approval. Great. Maybe they will seek out the US CFTC‘s stamp of approval, after that. (Or maybe not. We don’t know.) That would be great.

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FYI, David Jack has always been indexed at LinkedIn as “Director”. He was never listed there as “CEO”, as far as I can remember. And he is still described as “Director” on his LinkedIn profile.

I’m not sure about that, but I think I read somewhere that the TradeFair CEO was David Yu, from inception. So it would look like that the appointment of Robin Osmond is not a “shake-up”, as The Telegraph voiced it sensationally, but a normal operational decision. Maybe it took time for The Sporting Exchange’s headhunters to come up with the right candidate. Those are speculations of mine, because I don’t fully trust The Telegraph.

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Anyway, best wishes to TradeFair, David Jack, Robin Osmond, and all the other TradeFair employees… and traders.

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Previously: Why does Tradefair care about Prediction Markets – byTradeFair’s David Jack

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Here’s their section on politics:

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Here’s their section on finance:

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My thoughts:

1. Their “about” page still does not list the names of their editor(s) and publisher(s). It would give them credibility.
2. My understanding is that their blog is run by their PR department. That’s a problem. By essence, it means that readers will trust it less than the independent publications out there. Never in the history of the publishing business did a P.R. department of a commercial company managed to run a popular, credible publication —offline or online. It can’t be. Spin doctors want to control information, while journalists want to free it. It’s 2 different worlds, totally incompatible. It’ll never work.
3. They are mixing news articles written by outside journalists or bloggers with P.R. stuff written by people working at BetFair or TradeFair. Again, it’s not a good idea if you want to be trusted by the readers. The two kinds of postings should be published on 2 different blogs —the news blog should be kept completely separate from the corporate blog.
4. A close look at many of their entries show that the BetFair blog is not a quality publication. Their news stories mostly replicate, with less talent, what you can read elsewhere on the Web or in newspapers. There is no innovation.
5. Their postings consist entirely of texts —with very few charts, and almost no internal/external weblinks.
6. I find the BetFair blog very UK centric.
7. Sometimes, they would post for the search engine spiders, and not for the readers. The result is really bizarre, and leaves a funny taste in the mouth.
8. Their blog suffers from many technical problems. The most annoying issue is that their site feed does not reflect entirely their content. I’m a subscriber of their feed within Google Reader. I searched for “Robb”, “politics”, “Clinton”, and “TradeFair”, and I was not able to get the items related to the posts I saw on their website. They should fix this issue ASAP. (I blogged about this technical issue, some weeks ago. To no avail.)
9. Last time I reviewed the BetFair blog, I yelled against the fact that their main writer on prediction markets went with an anonymous byline, “The Predictor” (whose only qualification was that he has “long hair” and that he “eats cheese”). They backpedaled, and now their new prediction market writer goes with the “Mike Robb” byline. It’s much better. (Michael Robb is one of the BetFair employees working at their P.R. department, if I’m correct. His author profile page says he is their “resident political expert”. “Resident” means that he is a BetFair employee, in HammerSmith, as I take it. As whether he is really a “political expert”, as billed, I’ll leave it to you.)
10. From what I know, Michael Robb seems to be a decent and smart ‘chap’ (as they say in England). I wish him good luck. (Here’s his latest output.)
11. They restrict their prediction market approach to politics —that’s a huge mistake, which shows their total misunderstanding of the prediction market approach. They should apply it to sports, too.
12. They are completely clueless as to what form should take prediction market journalism. That’s grave. I’ll blog about that, later on. It’s a long story of prediction market mechanics, usage, intended audience, and strategy. I need to explain all this on an independent blog post, in the near future.
13. Professor Leighton Vaughan-Williams is billed as the “BetFair prof”. It’s a bad idea. It debases Academia. Scholars are paid to develop and propagate our global civilization’s knowledge, not to act as servile P.R. agents for commercial companies. Furthermore, a close look at his prediction market explainer shows that Leighton Vaughan-Williams lacks understanding of the concept of probability as applied to the market-generated predictions. And my readers remember that Leighton Vaughan-Williams has stubbornly refused to disclose the origin of the trading data he used to tout BetFair’s alleged extraordinary predictive power. (The suspicion is that he used InTrade’s data.) All the prediction market scientists I know (Justin Wolfers, Eric Ziztwitz, Robin Hanson, Koleman Stumpf, Paul Tetlock, David Pennock, Lance Fortnow, etc.) do disclose information easily. All this indicates to me that Leighton Vaughan-Williams is not to be trusted. (And scroll down to see the comment on his dubious post, and you’ll see that my negative opinion is shared by at least one informed BetFair trader.)
    
14. Finally, I was disagreeably surprised to see the presence of TradeFair in this BetFair blog. TradeFair was billed as independent from BetFair. If they are really independent, then they should publish on the TradeFair blog —not on the BetFair blog. Makes no sense at all. Makes the TradeFair independence looks like a P.R. trick at launch, as opposed to a reality. The P.R. department is what is worse at BetFair. The BetFair P.R. agents are arrogant ignorants, who don’t understand prediction markets, who don’t comprehend academic papers on prediction markets, who don’t listen, who don’t connect, who publish low-quality outputs that show how deep is their misunderstanding of the prediction markets, and hence, who generate bad publicity for BetFair in the prediction market circles (where InTrade is king). Yet, David Jack decided to put TradeFair in their incompetent hands. Immense error. And when you read each of their 3 binaries explainers, you realize that they are just typical (and mediocre) P.R. pieces, which could have well be published on the TradeFair trading site, in the “help” or “faq” section.

Even though InTrade-TradeSports and BetFair-TradeFair are not directly competitors, any web-literate internationalist interested in prediction markets can compare these 2 prediction exchanges and see almost instantly that the Irish are perfectly Americanized (with the caveat that they lack ethics, alas), whereas the HammerSmith people (in spite of their IT prowess) are just monkeying around with the grace of fatty toads. America hosts the best researchers and analysts in the field of prediction markets. America (not England) has produced the prediction market science (since the end of the nineties). BetFair-TradeFair should cross the Atlantic and get closer to this American bouillon de culture.

BetFair-TradeFair is the world’s #1 prediction exchange, and I value the fact that they decided to be ethical and legal (which contrasts with the pirates of InTrade-TradeSports). However, nobody in HammerSmith gets the prediction market approach (their attempts are superficial), and the BetFair P.R. agents have elevated mediocrity as a performing art. BetFair-TradeFair will have to change in the coming years —otherwise InTrade-TradeSports will remain the king of the prediction markets, forever.

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I am alerted today that the BetFair blog has updated its infamous Michigan story with a new compound chart bearing a clearer label. It reads now:

Republican nomination – The race so far

I’ll have some comments, below the chart, but first a technical note. The new chart posted is a 527-KB BMP image. I have replaced it with a 32-KB JPG image. The BetFair blog is not run professionally. Any web publisher knows that images should be reduced to the max. That’s the ABC of web publishing. (And to add insult to injury, I noted previously the technical bizarrery that the two professor Leighton Vaughan-Williams’s stories never appeared in the BetFair blog feed.)

For you information, I have updated all my previous blog posts on the topic with an addendum re-publishing this new chart.

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UPDATED ANALYSIS OF THE BETFAIR BLOG FIASCO:

1. Professor Leighton Vaughan-Williams should have defined what he means by “betting markets”, in his story. In the past (see the addendum of that story), prof Leighton Vaughan-Williams used two types of cocktail —one including all betting markets (traditional bookmaker odds and exchange odds), one including only the BetFair odds. He should publish an addendum to his story defining exactly what he means by “betting markets”, this time.
2. The BetFair blog editor should not have pasted a BetFair compound chart behind the writer’s back. It’s a big no-no in editing. Again, another proof (in a long list) that the Betfair blog is not run professionally.
3. If a chart were to be inserted on top of LVW’s story (with his consent, we hope), it should have been the expired chart(s) of the Michigan primary, since that’s the heart of LVW’s story.
4. The fact that the BetFair blog editor pasted (behind LVW’s back) a BetFair chart lead the readers (like Niall Or’Connor and me) to conclude that professor Leighton Vaughan-Williams means “the BetFair betting markets” when he writes about “the betting markets”. This is probably not the case, but nobody knows for sure —see my point #1 for the need of an explainer on this.
5. Now, if professor Leighton Vaughan-Williams means “the BetFair betting market” (I assign a low probability on this scenario), then the story looks bad. The story is bullish on the fact that the Mitt Romney event derivative (for the Michigan primary) was predictive. The election-day chart that I published yesterday evening (and republished below) shows Mitt Romney being the favorite starting at 3:00 PM EST on election day… Kind of a stretch to claim victory for the BetFair betting markets. I’m still waiting for BetFair to send me the full, historical chart on the Michigan primary.
6. BetFair should publish all expired charts —just like InTrade-TradeSports are doing. See my new page, re-publishing some important expired prediction market charts. That way, any controversy could be settled more quickly.
7. With all due respect to him, it looks bad on professor Leighton Vaughan-Williams for giving his writings to a corporate blog where the publisher and editor’s names are not listed anywhere, and whose overall content quality is feeble —to say the least. Especially since we read the testimony of a furious Betair blog writer, who described the BetFair blog editor as anonymous, incompetent and tyrannical.
8. Besides Niall O’Connor’s critical comments, professor Leighton Vaughan-Williams’s story on the BetFair blog has attracted a negative comment, calling his argument “questionable to say the least“, and asking (as I am doing on this current post) for more data to be published in an addendum.
9. It looks bad on the BetFair management for publishing completely crappy stories like that. It damages the BetFair brand. I should tell my readers, though, that the BetFair-TradeFair managers (like Michel Robb, Tony Clare, Mark Davies, David Jack, Robin Marks, etc.) are highly professional, efficient, law-abiding, forward-looking, helpful, ethical, polite, and respectful. It is a real pity that the BetFair blog tarnishes BetFair’s reputation.
10. Betair should focus on being a prediction market resource for journalists and bloggers. As of today, they still don’t provide on their website dynamic charts and expired charts.
11. As I repeated many times on Midas Oracle, prediction market journalism is hard, complex and costly. It can’t be done by any living organism (hermaphrodite or not ) simply equipped with a computer and an Internet connection.

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As an addendum, I re-publish here the election-day Michigan chart (on the Republican side). As I said, I’m still waiting for BetFair to send me the full, historical chart. You can see, on this Republican-side chart, Mitt Romney (in red) as the Comeback Kid —starting at 3:00PM EST on election day (that’s 8:00 PM, British time, on the chart).

For your information, here’s what professor Leighton Vaughan-Williams wrote. As I said, an explainer from him is needed to determine whether he means the “betting markets” in general (with, or without, BetFair included?) or the “BetFair betting markets”.

Professor Leighton Vaughan-Williams on the official BetFair blog:

[...] Those taking the same advice on Tuesday evening [2008-01-15 = date of the Michigan primary] were similarly well rewarded as well-backed Mitt Romney stormed into clear favouritism in the markets and a comfortable victory at the polls. After a blip in the New Hampshire Democratic primary the old certainties – that election favourites tend to win elections – was re-established.

As in the Republican New Hampshire primary, the polls and pundits had declared the race between Senator McCain and Governor Romney as a toss-up while the betting markets pointed to a comfortable victory in both cases for the eventual winners. Once again, in the battle of the polls, pundits and markets, the power of the betting markets to assimilate the collective knowledge and wisdom of the crowd had prevailed. [...]

As for the InTrade “betting markets”, if that’s what professor Leighton Vaughan-Williams means (solely, or among others), they show a strong support for Mitt Romney in the last 2 days (which includes election day). Kind of a stretch to claim a victory for the “betting markets”. Also, it would be funny to have the (anynomized) InTrade data interpreted on the blog of another exchange (BetFair, a competitor of InTrade-TradeSports) to hint about the alleged strength and accuracy of the BetFair “betting markets”. That would be the last drop that breaks the water bucket. Another reason why professor Leighton Vaughan-Williams should come forward to explain what he means by “betting markets” in his story. Does he mean the “InTrade betting markets”???

(FYI, the Mitt Romney event derivative was expired to 100.)

Psstt… Sounds like a vertical line is lacking on this chart… Look at the right end… Bizarre.

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NEXT: No more anonymized trading data, please. State your source(s).

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So I can’t say anything.

Or, next thing, I’m a dead blogger.

As soon as you catch this post, RUSH THERE AND TAKE A VIRTUAL TOUR. Awesome. Nigel Eccles is the man. John Delaney, David Jack, Adam Siegel and Emile Servan-Schreiber can return to the locker room. Robin Hanson and Justin Wolfers are history artifacts, starting today. The whole world will look completely different after the HubDub launch.

How come nobody got that idea (news aggregation + prediction exchange) before HubDub???

1. George Tziralis
2. Robin Hanson
3. Jonathan Kennedy
4. and I’ll give the 4th spot to a combo, mixing takes from John Tierney, Adam Siegel (surprisingly pertinent –I bet he is on a fish diet, post Christmas ), and Steve Roman.
5. UPDATE: “Thrutch“, Emile Servan-Schreiber and Panos Ipeirotis.

AWOLs (so far): PMIA, AEI-Brookings, InTrade, TradeSports, BetFair, TradeFair, NewsFutures, Emile Servan-Schreiber, Jed Christiansen, Koleman Strumpf, Bo Cowgill, Richard Borghesi, Chris Hibbert, David Perry, Ken Kittlitz, Paul Tetlock, David Pennock, Mike Linksvayer, Brent Stinsky, David Yu, Mark Davis, David Jack, James Surowiecki, Tyler Cowen, Greg Mankiw, Donald Luskin, John Delaney [*], etc.

[*] Steve Bass tells us that John Delaney‘s pre-NH CNBC appearance was awesome. I was up that day, waiting for that CNBC segment, but failed to spot it. If somebody sends me the YouTube link, I’ll publish it here.

Betfair enters financial markets with Tradefair launch
Tradefair to provide a revolutionary new retail binaries exchange

Betfair, the world’s leading online betting exchange has announced the formation of an exciting new business, Tradefair. Established to provide a range of financial products to the retail market, Tradefair launches with a binaries trading exchange and a traditional spread betting offering.

Tradefair is based on the same core values of innovation and championing the customer that gave birth to Betfair. Tradefair also shares with Betfair the appetite for hugely ambitious goals. Tradefair aims to become the leading financial trading destination of choice offering its customers a range of traditional and exchange traded products.

Betfair’s CEO, David Yu said:

Tradefair is a tremendous addition to the Betfair portfolio. It is a clear demonstration of Betfair’s continued commitment to growth and innovation, and we hope to have the same revolutionary impact on the financial market as we have had on the sports betting market.

Using Betfair’s revolutionary technology, the binaries exchange allows anyone to set the price, be the market-maker and drive the best price on a range of major financial markets.

The Tradefair concept originated from Betfair’s New Ventures team, but will operate independently within the Betfair group of companies. Set up by David Jack and Martyn Holman, Tradefair has also been aided in its development by Ed Warner, the former IFX Markets CEO.

Applying Betfair’s world class exchange technology to financial markets will have far reaching implications for the type of markets offered, the level of access and overall value and opportunities for the customer,

said David Jack.

Tradefair is hoping to encourage leading financial businesses and institutional market-makers to participate on the exchange in order to generate liquidity and intra-business trading and even hedge their own exposures. Regardless of whether the trader is an individual or a business, everyone will have the equivalent to direct market access through Tradefair’s web based trading site and standard industry interfaces.

Tradefair’s initial offering will focus on two types of financial trading products (both of which are currently free from capital gains tax and stamp-duty for UK tax residents): binaries offered on a binaries exchange and traditional financial spread betting.

Anyone can be a market-maker on the exchange – assuming they have the capital – enabling smarter, more cost-efficient traders to compete in setting the price. The exchange also offers traders the ability to gain exposure to what might traditionally be called ‘esoteric’ markets which in reality underpin the driving forces of the world economy, including economic indicators such as central bank decisions and employment data. The range of markets available on the exchange will grow over time, but already includes major indices, currency pairings and commodities markets.

Tradefair Spreads, provided via a white label agreement with London Capital Group, is Tradefair’s traditional financial spread betting product. Tradefair Spreads believes that it offers traders some of the best prices and lowest funding charges available with many added extras to assist with analysis and information to inform trading decisions.

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 Jack – 2007-12-06

Yesterday evening, Saturday, I blogged about InTrade’s global warming prediction markets, just opened. Today, Sunday afternoon, I have just found out, thanks to a tip from Ralf Martin, that the InTrade global warming prediction markets were actually set up in collaboration with the London School of Economics’ Centre for Economic Perfomance.

What will happen to global efforts to limit greenhouse gas emissions when the current commitment period of the Kyoto protocol ends in 2012? There are hopes that the United Nations (UN) climate change conference that started on 3 December in Bali will outline a road map for a successor agreement that might be reached in late 2009.

To know what is going to happen in 2012 and beyond is not only relevant for future generations but for a wide range of investment decisions today:

• Should you buy that flat in a riverside building?
• Should companies invest in R&D on carbon capture and storage technologies?
• Should governments provide more money to wind farm development or rather improve flood defences and relocate people living close to the coast?
• Should an energy intensive company relocate its production from an industrialised country to a developing country unlikely to be covered by a pollution target?

To make these choices wisely, we need forecasts on the likely outcome and design of any post-Kyoto agreement. There is no shortage of opinions on what is going to happen. But whom should you trust? Opinions will be influenced by wishful thinking and strategic positioning alike as well as being based on different insights into parts of the puzzle. For example, living in the rich world, you might have a good sense of what the typical voter in your country thinks about pollution targets, but what about Indian voters or the Chinese communist party?

If the UNFCC [*] – the UN body in charge of the climate change negotiations – was a publicly listed company whose profits depended on the climate change reduction targets it achieves, a good way of getting an idea on what’s going to happen is to have a look at its share price rather than public statements of its bosses or shareholders. This is obviously not a possibility. But what is possible now might be even better. [...]

[*] There are 3 “C”s actually. For Christ’s sake, be careful. –> UNFCCC (United Nations Framework Convention on Climate Change). Look at the logo, below.

UPDATE: They have corrected the spelling on their blog.

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

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.

TradeFair’s 0-100 trading engine could also be used to float all kinds of event derivatives, not just the financials. It will take time for us to understand why they insist to corner TradeFair into the financial sector, exclusively —a la HedgeStreet.

DEVELOPING… (as Matt Drudge is used to write.)

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