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Does InTrade participate on its own prediction markets?

Chris F. Masse — Fri, 19 Mar 2010 16:52:11 +0000

One (anonymous) InTrade trader:

I am utterly convinced Intrade participates in its own markets. Every few hours some kind of API hits the bids on the GOP 2012 nomination contract when the bids sum to more 100. It will even short bids at 0.1, which is a money losing proposition when you figure the transaction cost alone of 0.3 (since the price is below 5). Also, the amount of margin required to short all of these bids is in the millions of dollars.

So the actor has to a) not care about the transaction fee and b) have limitless margin. Intrade fits the bill for both of these. a) they don’t care about transaction fees because they are ultimately collecting them and b) if you only short when the bids are summed to over 100, it’s essentially an arb.

The trader also tells me that, on the InTrade forums where those questions were asked many times, InTrade never denied that they trade on their own prediction markets.

Previously: What was Max Keiser doing at InTrade HQ two years ago? –> “due diligence”…!??…

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What was Max Keiser doing at InTrade HQ two years ago? –> “due diligence”…!??…

Chris F. Masse — Fri, 19 Mar 2010 14:59:35 +0000

Max Keiser:

[...] I asked John Delaney and his tech team when I was doing my due diligence on InTrade a couple of years ago in Dublin – about the firm’s own participation in making markets – and the potential to ‘manage’ prices in ways that were outside of the normal price discovery mechanism. I came away from that meeting not convinced at all that adequate checks and balances were in place to protect against manipulation. [...]

Details, details.

I am calling all my Deep Throats. Contact me. Tell me more.

Next: Does InTrade participate on its own prediction markets?

Nate Silver: InTrade probability on ObamaCare is quite right.

Chris F. Masse — Fri, 19 Mar 2010 07:17:19 +0000

Nate Silver:

I’m not sure if you should particularly care about the little 5 or 10 point hedges (usually to the pessimistic side) that I’ve periodically been recommending around the Intrade contract on the chances of reform passing. Even if you staffed a whole room full of the smartest vote-counters, modelers and analysts and had them work 24/7 on trying to beat the Intrade contract, I’m not sure if they could come up with anything sufficiently rigorous to provide them with a real advantage. (That doesn’t necessarily mean the market is “efficient”, but we’ll save that conversation for another day.) But for what it’s worth, the Intrade contract, which is trading at 75 percent right now, now looks about right to me or perhaps even a hair pessimistic.

ADDENDUM

More info on health care reform on Memeorandum, Politico and Slate.

“InTrade should address this incident and suspend the account of whoever did this.”

Chris F. Masse — Wed, 17 Mar 2010 17:51:56 +0000

Dixit Jason Ruspini.

OBAMACARE PREDICTION MARKET WAS BRIEFLY MANIPULATED YESTERDAY EVENING SO IT WOULD ARTIFICIALLY CLOSE AT $35. – [CHART]

Chris F. Masse — Wed, 17 Mar 2010 15:22:18 +0000

IT IS NOW BACK TO ABOVE $60.

See Jason Ruspini’s comment. UPDATE: Carlos Graterol. Joe Weisenthal. Gawker. Max Keiser.

ADDENDUM

More info on health care reform on Memeorandum and Politico.

Max Keiser weighs in on potential insider trading and hypothetical manipulation in the ObamaCare prediction market at InTrade.

Chris F. Masse — Tue, 16 Mar 2010 17:17:39 +0000

Max says that the political prediction markets are “routinely manipulated” and we often see “price rigging”…

9:57 into:

Previously: What has been the best InTrade prediction market ever? Has the ObamaCare prediction market at InTrade been “ahead of the commentary”?

What has been the best InTrade prediction market ever? Has the ObamaCare prediction market at InTrade been “ahead of the commentary”?

Chris F. Masse — Tue, 16 Mar 2010 16:05:54 +0000

Jason Ruspini (who feels that the health care reform proposal might well be adopted) wanna feedback from you, folks.

Which InTrade prediction market(s) has/have been ahead of the Press (rather than the other way around)? What is/are the best (most divergent from the commentary, and correct) InTrade prediction market(s) in people’s memories?
Do you sense that the ObamaCare prediction market at InTrade fits these 2 criteria?

UPDATE: I asked The Brain whether he meant generalist media or political media, and he meant “generalist”. That makes all the difference in the world.

ADDENDUM

More info on health care reform on Memeorandum.

Previously: Insider trading in the InTrade prediction market on health care reform?

CrowdCast + SAP

Chris F. Masse — Tue, 16 Mar 2010 15:47:55 +0000

Business Objects + Prediction Markets

Dear MO reader: Why you should try Predictalot

David Pennock — Tue, 16 Mar 2010 15:21:49 +0000

Why should you try Predictalot?

Gamers: Make almost any prediction you can think of about March Madness, the NCAA men’s basketball tournament.
Sports fans: Check the crowd’s odds: Is St. Mary’s the next Cinderella?
Economists: Play with a true combinatorial prediction market with 9.2 quintillion outcomes and a single pool of liquidity, unlike almost any other of today’s financial and prediction markets.
Geeks: Ponder some of the interesting computer science challenges, including approximating #P-hard problems and an eerily similar sampling problem as faced by physicists.
Everybody’s doing it.
Barack Obama might do it, according to VentureBeat on NYTimes.com: “President Barack Obama will likely be busy this week [but]… maybe he’ll be able to sneak a peek at Predictalot on his BlackBerry between meetings.”

Predictalot is a combinatorial prediction exchange.

Chris F. Masse — Tue, 16 Mar 2010 08:33:22 +0000

“Predictalot is what is called a combinatorial prediction market.“