This BetFair video totally misinforms the public about the history of the betting exchange industry. It actually started in the United States of America, with the Iowa Electronic Markets in 1988, the ForeSight Exchange in 1994, and the Hollywood Stock Exchange in 1996.

But see, first, Chris Hibbert’s comment:

1. People now “google” about anything and expect “free” information.
2. People now make “friends” (acquaintances, actually) on the Web, and “share” tidbits with one another.

Both the prediction exchanges and the prediction market blogs should take these 2 trends into account.

InTrade .NET is an attempt at milking out these ideas —right out of HubDub’s textbook.

(I am aware of many other prediction market firms that have already implemented some of these functions. I am not authorized to blog about it.)

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Ken Kittlitz (the head of the Foresight Exchange) to me:

You’re correct, the owner of an FX claim must find a different FX player to act as the judge. This is largely to ensure that at least more than one person thinks the claim is worth having.

With Inkling Markets and HubDub, at the contrary, the creator of a prediction market can be the same person who (judges and) expires it.

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From the HSX site feed:

Hollywood Stock Exchange is an integrated marketing, research and technology company driven by its patented entertainment stock market, HSX.com, the longest continuously operating prediction market.

Reality Check:

Foresight Exchange – (FX, FSX) – (Alberta, Canada) — URL: IdeoSphere – Alternate URL: Idea Futures — Launched in 1994 by Ken Kittlitz, Sean Morgan, Mark James, Greg James, David McFadzean and Duane Hewitt — Godfathered by Robin Hanson (a prediction market co-inventor)

Hollywood Stock Exchange – (HSX) – (L.A., California, U.S.A.) — URL: HSX — HSX Movies – HSX Community — CDA with an automated market maker (AMM) that balances buy/sell orders by generating both buy and sell orders, which keep the market maker in balance as well. — HSX is a play-money prediction exchange with a game, IPO-like interface. — Owned by Cantor Fitzgerald — Founded in 1996 by Max Keiser and Michael Burns

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And, now, here’s my today’s blog post:

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The sub-title of the HSX site feed has just been slightly amended to read, now:

Hollywood Stock Exchange is an integrated marketing, research and technology company driven by its patented entertainment stock market, HSX.com, the longest continuously operating commercial prediction market

The adjective “commercial” has been added.

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My Question: In light of Robin Hanson’s call for the right definitions (“Prediction Markets Definitions”, his blog post here, at Midas Oracle), what do you make of the HSX line?

My Answer: Since veterans Iowa Electronic Markets and Foresight Exchange were (and are still) non-commercial operations, I’m fine with the brand-new HSX line. (Nota Bene: The for-profit consulting firm Consensus Point was born recently from the Foresight Exchange technology, as you all know.) I would just prefer the term “EXCHANGE”, as in, “HSX, the longest continuously operating commercial prediction exchange“. Let’s check next month, in December 2006, whether they make another change —probably not, this time.

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MORE LINKS: See CFM for the complete lists of prediction market consultants and prediction exchanges. Alternatively, see AEI-Brookings’s mini-directory or the Wikipedia entry on prediction markets.

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HAPPY THANKSGIVING. GOBBLE, GOBBLE.

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Addendum (November 29): Chris Hibbert has posted a comment…

The precursor to the Foresight Exchange (FX), was known as IF (for “Idea Futures”). IF was created in 1994, and the transition to FX happened in July 1996, according to my mail archives. So I would say that the veracity of HSX’s claim to be the longest CONTINUOUSLY OPERATING exchange depends on whether they started before or after July 24, 1996. The transition from IF to FX attempted to maintain account balances and markets that were already in operation, but there were some glitches.

Others might point to the fact that they did maintain account balances and running markets through the transition (however rocky the transition might have been) to say that FX is a continuously operating successor to IF, no different than any other software rev.

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Addendum 2 (November 29): I got it from the Horse’s mouth that “HSX was founded on April 12, 1996“.

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Addendum 3 (November 29): Ken Kittlitz, the co-founder of the Foresight Exchange, has sent me this clarification…

The transition from IF to FX occurred on July 4th, 1996. We preserved as much data as we could, including all open claims, the entire ticker history, and a fair number of user accounts. As Chris notes, the transition was somewhat rocky. However, I consider it an upgrade to the original system rather than the creation of a distinct new system.

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