The CFTC is going to close the comments in 7 days. We have 7 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowi

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THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

– What Vernon Smith told the CFTC. &#8212- (PDF file)

This week, 4 prediction market organizations and VIPs will submit their comment to the CFTC.

– Michael Giberson&#8217-s economic take.

– Chris Hibbert&#8217-s libertarian take.

– Tom W. Bell&#8217-s libertarian take.

– Jed Christiansen&#8217-s pragmatic take.

– A young economist rebuts the American Enterprise Institute. &#8212- (MO mirror)

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

How come John Salvatiers comment to the CFTC has not appeared on their website already?

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Are comments that favor FOR-PROFIT prediction exchanges censored by the CFTC?

I want to see John&#8217-s comment appear here. &#8211- I&#8217-ll interpret any censorship as a neo-cons&#8217- black op. :-D

Previous blog posts by Chris F. Masse:

  • Meet professor Thomas W. Malone (on the right), from the MIT’s Center for Collective Intelligence.
  • Tom W. Bell rebuts the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
  • The upcoming CFTC ruling may come as thunder and lightning —or may not. That is the question. Will they exempt or will they regulate?
  • PROF TOM W. BELL, PLEASE, DO SKIP THE PAGAN CELEBRATIONS, AND, PLEASE, DO RETURN TO YOUR DESK TO FINISH THE DRAFT OF YOUR COMMENT TO THE CFTC. THANKS FOR YOUR PRAGMATIC (NOT ‘ETHEREAL’) CONTRIBUTION TO “THE FUTURE OF HUMANITY”. (There is a hidden slam to Robin Hanson in this title. I wonder whether people will get the joke.)
  • The CFTC is going to close the comments in 3 days. We have 3 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
  • TOM W. BELL: “Thanks, Chris. Thanks, too, for being such an effective gadfly. I might well have blown off the whole exercise if you had not kept blogging about how you were awaiting my comment!”
  • What to think of HedgeStreet’s comment to the CFTC

A letter to the CFTC about for-profit prediction market exchanges

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I submitted a comment to the CFTC about their &#8220-Concept Release on the Appropriate Regulatory Treatment of Event Contracts.&#8221- Specifically, I addressed the American Enterprise Institute&#8217-s call for a ban on for-profit prediction market exchanges as well as restricting fees charged by such exchanges to &#8220-modest&#8221- ones (link). This is what I said:

Recently, the American Enterprise Institute and others have asked the Commodities and Futures Trading Commission to prohibit for-profit prediction market exchanges, and only allow prediction markets to charge “modest fees”. I will make the case here that both for-profit exchanges and more than “modest” may both be important for getting the most benefits from prediction markets.

One of the major benefits of prediction is that people and companies can use prediction markets’ relatively accurate and well-calibrated predictions to improve their planning. Market predictions reduce the calculation work that people and companies have to do in order to come up with predictions because they can outsource the work to prediction markets.

It would be a mistake to unnecessarily limit the areas which prediction markets are used to predict, because it is difficult to predict what areas may help people and companies improve their planning. For profit exchanges will have incentives to find as many places where such more accurate and better calibrated predictions are useful, especially in industry. Thus it would be a mistake to prohibit either for-profit exchanges or limit the fees that exchanges can charge.

Consider the following scenario:
A number of companies in some industry are interested in the information about the future price of certain products, the future of industry relevant technologies or in future demand for certain products or any number of things of that might be predicted using prediction markets.

In response to this interest, a for-profit company creates a prediction market exchange for contracts about the information that those companies are interested in, and then sells access to the exchange to companies in relevant industries. The exchange company uses the revenue generated from exchange subscriptions to subsidize contracts in order to generate more accurate predictions. Employees from the companies who subscribe to the exchanges would be the market participants.

Such exchanges would be even more attractive to companies than internal prediction market exchanges because contract subsidies and the pooling of market participants in multiple companies into one market would improve the usefulness of prices significantly.

Allowing a for profit company to create such exchanges means that it will have strong incentives to make its exchange contracts the more useful to its subscribers, whereas non-profit companies will have weaker incentives to do so. Now, perhaps someone would step up and create a non-profit exchange to fill this role, but perhaps none would. This is especially likely in markets where there is little camaraderie and collusion. Non-profit exchanges will probably also get created and develop slower than for-profit exchanges. This would very bad in cases where subscriber needs change frequently, because non-profits would have trouble keeping up.

Limiting the fees that exchanges can charge is also a bad idea, because the amount by which the exchange company would need to subsidize a contract in order to achieve the desired accuracy could be large in some cases. When developing models, and collecting an analyzing data is costly, large subsidies would be needed to get people to make accurate predictions.

I do not doubt that non-profit prediction market exchanges are likely to be very valuable, especially in public policy arenas, but it would be a serious mistake limit prediction market exchanges to non-profits.

[cross-posted at Good Morning, Economics]

The CFTC is going to close the comments in 8 days. We have 8 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowi

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THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

– What Vernon Smith told the CFTC. &#8212- (PDF file)

– Michael Giberson&#8217-s economic take.

– Chris Hibbert&#8217-s libertarian take.

– Tom W. Bell&#8217-s libertarian take.

– Jed Christiansen&#8217-s pragmatic take.

– A young economist rebuts the American Enterprise Institute. &#8212- (MO mirror)

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

The CFTC is going to close the comments in 9 days. We have 9 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowi

No Gravatar

THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

– What Vernon Smith told the CFTC. &#8212- (PDF file)

– Michael Giberson&#8217-s economic take.

– Chris Hibbert&#8217-s libertarian take.

– Tom W. Bell&#8217-s libertarian take.

– Jed Christiansen&#8217-s pragmatic take.

– A young economist rebuts the American Enterprise Institute.

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

The CFTC is going to close the comments in 10 days. We have 10 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfo

No Gravatar

THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

– A young economist rebuts the American Enterprise Institute.

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

– What Vernon Smith told the CFTC.

– Chris Hibbert&#8217-s libertarian take.

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

The CFTC Readings Of The Day -Thursday Morning Edition

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I highly recommend that you read the 2 documents I put in bold.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

A young economist rebuts the American Enterprise Institute.

Previous blog posts by Chris F. Masse:

  • The CFTC is going to close the comments in 9 days. We have 9 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
  • Forrest Nelson valids Emile Servan-Schreiber.
  • Averaging One’s Guesses
  • Americans love rankings, but Americans hate to be assessed subjectively.
  • A libertarian view on the Internet betting and gambling industry in the United States of America
  • The CFTC is going to close the comments in 10 days. We have 10 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges (e.g., InTrade USA or BetFair USA), and counter the puritan and sterile petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
  • The Numbers Guy

The CFTC is going to close the comments in 11 days. We have 11 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

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THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

– A young economist rebuts the American Enterprise Institute.

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyer&#8217-s take. &#8212- (PDF file)

The Schulte, Roth &amp- Zabel lawyers&#8217- take. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- take. &#8212- (PDF file)

– What Vernon Smith told the CFTC.

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

– Chris Hibbert&#8217-s libertarian take.

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

The CFTC is going to close the comments in 12 days. We have 12 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).

No Gravatar

THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyers explain the meaning of the CFTC&#8217-s concept release on &#8220-event markets&#8221-. &#8212- (PDF file)

– What Vernon Smith told the CFTC.

American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war

COMMENTS TO THE CFTC: What to expect from Tom W. Bell and Jason Ruspini

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For those who are just surfacing from an Afghan cave: Tom W. Bell is a law professor at Chapman University (in California) and Jason Ruspini is a Wall Street professional (in New York).

It seems that both will, independently of each other, write to the CFTC about the legalization of the &#8220-event markets&#8221- (here are the comments to the CFTC) &#8212-a bad term for the &#8220-non-hedgeable event derivative markets&#8221- (which is also, probably, a term that is quite awful to your ears :-D ). What to expect from them? (WARNING: This is highly speculative.)

TOM W. BELL

  • He will state the libertarian point of view &#8212-laissez faire, laissez aller. – [DISCLOSURE: I am a mid-core libertarian myself, so I like that.]
  • Overall, he will try to put up a basket of legal hacks &#8212-to establish that the real-money prediction markets should be as free as possible.
  • In particular, he will try to make the point that &#8220-event markets&#8221- should be covered by the laws governing &#8220-notes&#8221- &#8212-not by the laws governing &#8220-contracts&#8221-.
  • By doing so, he will tell the CFTC to go fugging themselves &#8212-since the CFTC is allegedly about &#8220-contracts&#8221-, not about &#8220-notes&#8221-.

JASON RUSPINI

  • He will state that all the real-money prediction markets should be covered by the CFTC.
  • He will navigate within the legal framework that the CFTC has established in their &#8220-concept release&#8221-. – [See this document from the Arnold &amp- Porter lawyers, if you wanna know what’s a “concept release”, in the mind of the CFTC regulators. – PDF file.]
  • He will be very careful not to offense those bureaucrats.

TOM W. BELL vs JASON RUSPINI

  • It&#8217-s great that the libertarian point of view is elaborated and disseminated to these bureaucrats. However, the CFTC is an agency, not the US Supreme Court Of Justice &#8212-and the fact that Tom W. Bell is right does not mean that he will prevail.
  • Jason Ruspini&#8217-s approach is extremely reasonable: he adopts the enemy&#8217-s point of view, and, from within, tries to maneuver the regulatory barriers to create as much room as possible. Also, Jason Ruspini will address only the CFTC questions which he grasps well. (Contrast that with some who spread themselves too thin, and answer all the CFTC questions, even those where they have no expertise or experience. Their answers are, and, will be totally ignored. It&#8217-s not what you say that is important- it&#8217-s what you say in relation with who you are to say that.) I&#8217-m pulling for Jason Ruspini&#8217-s approach.

TAKEAWAY

  • If Jason Ruspini does not fuck it up, he has the potentiality to influence positively the CFTC, and to become one of the great leaders of the field of prediction markets. Let&#8217-s wish for that. Our field needs courageous men (and women) with the right political compass and the sense of pragmatism.

THE MIDAS ORACLE TAKES:

– CALL TO ACTION: Let&#8217-s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with &#8220-event markets&#8221-.

– In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

– A young economist rebuts the American Enterprise Institute.

BACKGROUND INFO:

CFTC’s Concept Release on the Appropriate Regulatory Treatment of Event Contracts&#8230- notably how they define &#8220-event markets&#8221-, how they are going to extend their &#8220-exemption&#8221- to other IEM-like prediction exchanges, and how they framed their questions to the public. Here are the comments sent to the CFTC.

– The Arnold &amp- Porter lawyers explain the meaning of the CFTC&#8217-s concept release on &#8220-event markets&#8221-. &#8212- (PDF file)

– The Schulte &amp- Roth &amp- Zabel lawyers&#8217- takes. &#8212- (PDF file)

– The Sullivan &amp- Cromwell lawyers&#8217- takes. &#8212- (PDF file)

– What Vernon Smith told the CFTC.

The American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America

APPENDIX:

Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

– How the neo-cons drove the United States of America into the unecessary Iraq war