For info, here’s the Midas Oracle feed at Twitter. I publish there plenty of prediction market news that don’t appear on this blog.

Previously.

C’est minable.

UPDATE: David Rothschild e-mails me to say he forgot to link to InTrade and BetFair in that story, at publication time, but he added the links later on. Also, he did link to InTrade and BetFair in the past. Kudos to David.

Platform Metrics (More Soon)
Platform operational: Since 2001
Total Predictions: 619,141,899
Average Daily Predictions: 169,589

This is just a preposterous misrepresentation of the volume of activity on the site.

The average number of contracts traded per day for the year to date is 9k, with a median of 8k. Those numbers are way up from 2010, before the change from high transaction fees to a small, flat monthly fee.

Since there is someone on both sides of each trade, it’s could be fair to say that each trade represents two predictions so you can double the trading volume if you are counting “predictions” instead. But counting predictions raises another problem.

If I think Sarah Palin will run and I place an order to buy 100 contracts, I have not made 100 predictions. I have made one prediction. (Even if I place an order today, and another order tomorrow, unless I am buying or selling at a very different price from the first order it’s a stretch to say that I’m making new predictions with every order.)

So there are at least two problems:

One is that it’s silly to call every contract a separate prediction when a single person, acting on a single point of view (e.g., Palin has a 25-30% chance of running) can buy or sell many individual contracts (buying at 24, selling at 31, for instance, without changing their “prediction” at all). And of course these trades often happen in blocks of 10 or 100 or 1000 contracts anyway.

Two is that whether you are counting, trades, contracts traded, or “predictions” you don’t get anywhere near the 170k daily “somethings” that Intrade is claiming. Unless…

Perhaps they are not only counting each contract as a separate “prediction,” even if a single order is for many contracts. Perhaps they are also counting every order, whether it is executed or not. That is, I put in an order to buy 100 contracts of Palin at 24, and they count 100 “predictions.” Then I put in an order to buy 500 at 10, and another for 1000 at 1, and another for 5000 at .1, and a sell for 1000 at 99… and by Intrade’s math I’ve just made nearly eight thousand predictions. and when I change the order for 100 at 24 to 100 at 24.1, that’s another 100 predictions. And when some bozo puts in an order to buy 5000 shares of something for a penny after the event has already happened, that’s 5k more “predictions.”

The urge to publish big, impressive numbers about activity on Intrade is understandable. Venturing into fantasyland to get there is just embarrassing.

Speaking of math, my very rough estimate is that Intrade is collecting twice as much per month in fees via the $5/month charge than they would have been based on the pre-2011 transaction fees.

This is good for Intrade, good for active traders, and horrid for smaller accounts. It’s also a short-term situation with a bad ending. Once the small accounts are mostly closed out or leeched down to a zero balance, then what? How many mid- or large-sized, reasonably active accounts are there? Within 2-3 years can one really expect there to be more than a few thousand accounts left? Some new big players may come into the mix if they see the good deal, but each one is only worth $60/year.

Even if you think Intrade will have 15k active accounts in a few years (which I don’t), that’s still less than a million dollars of top line revenue. Larger traders will probably tolerate an increase in fees at some point, but still I do not see how Intrade gets from the current situation to a future as a solid, profitable, growing company that is more than a flea compared to BetFair.

More.

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“A financial adviser or stock broker should be licensed to provide any consultation on investment in securities.”

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On InTrade: All the economists blogging about their prediction markets never mentioned the numerous disputes about the non-sport contracts (North Korean Missile, Closure of Gitmo, Departure of Hosni Mubarak, US Debt Ceiling, etc. etc. etc. etc.).

On John Delaney’s death: He did something very risky (climbing the top of the mount Everest) for his own pleasure, and he left a widow and a bunch of orphans. According to one InTrade trader, his personality raised red flags in the past.

Disclosure: I am not an investor in prediction market companies, contrary to some lauding commentors under the David Pennock post.

Previously: Post-Delaney InTrade experiences turmoil related to the debt ceiling prediction market. — [CHART + LINK]

As I said many times, Carl Wolfenden is an incompetent, and all the economists advertising InTrade on their blogs and in the media are corrupted as they are dependent, for their research, on the trading data, which are handed out only to the lauding ones.

37 pages (!!) on the InTrade message board.

Once again, one can question the professionalism of the InTrade execs and the usefulness of the prediction markets.