I expect TradeSports and BetFair to join this industry, one day.

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New York Post: GAMBLERS BET ON HILL & MITT FOR VEEP.

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New Product Blockbusters: The Magic and Science of Prediction Markets
Teck-Hua Ho & Kay-Yut Chen
50/1 (Fall 2007): 144-158

New product innovation is a strategic business activity that involves significant financial resources and managerial attention. Most new product launches fail because existing methods are unable to forecast their commercial successes accurately. In this article, we describe a market-based method to address this gap. This method capitalizes on the power of the “wisdom of crowds” by allowing people to interact in organized markets governed by well-defined rules. The working of these markets relies on five scientific principles referred to as I4C (pronounced as “I foresee”). These markets motivate people to share information freely through a price discovery process. Prediction markets seek information aggregation from a large group of diverse individuals by encouraging active participation. We demonstrate the power of the markets with real application examples from a wide variety of industries.

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More:

The principles are incentive, indicator, improvement, independence, and crowd.

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New Product Innovation: NewsFutures, Inkling Markets, Consensus Point and Xpree can help.

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[The New York Post video] is an informative video, but I want to quibble about two things. I view the term “investing” as the act of buying an asset with the hopes of it appreciating in value sometime in the future. Used correctly, you “invest” in a new home, a company on the stock exchange, or a baseball card collection.

However, you can’t “invest” in politics as the New York Post reporter said you could. The reason why you can’t is because contracts sold on prediction markets like InTrade.com are not assets; they are derivatives. Their value is based on the outcome of some event. Like futures contracts for frozen concentrated orange juice. [...]

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I have been blogging about that for years, here, on Midas Oracle.

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Frightening.

New York Post

Reason magazine

ABC News

Wall Street Journal

Wall Street Journal

Slate

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Psstt… Somebody registered Client9.com just after news broke…

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New York Post

New York Times

Wall Street Journal

Portfolio

ABC News

ABC News

Wall Street Journal

Wall Street Journal

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New York Post: OUR NEW AMI SALUTES AMERICA THE BEAUTIFUL

The Wall Street Journal: President Sarkozy

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But don’t expect Sarkozy to revert Chirac’s “no” policy on the Iraq war.

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New York Post (about Portfolio, the new business magazine I told you about on Sunday):

[...] One of the more riveting pieces was a Michael Lewis prediction about a sports stock market exchange in the near future, in which the average Joe – or hedge-fund Joe – will invest in an athlete like a stock, the investment rising or falling on the sports star’s performance. We’re still not sure what he’s talking about, but it sounds fun! [...]

Portfolio:

The Jock Exchange

Wall Street is about to launch a new way to trade professional athletes the way you trade stocks. A piece of Tiger, anyone?

When financial historians look back and ask why it took Wall Street so long to create the first public stock market that trades in professional athletes, they will see ours as an age of creative ferment. They’ll see a new, extremely well-financed company in Silicon Valley that, for the moment, sells itself as a fantasy sports site but aims to become, as its co-founder Mike Kerns puts it, “the first real stock market in athletes.” And they’ll find, in the bowels of the U.S. Patent and Trademark Office, an application from a cryptic entity called A.S.A. Sports Exchange containing a description of a design for just such a market: The athlete would sell 20 percent of all future on-field or on-court earnings to a trust, which would, in turn, sell securities to the public. They’ll also single out the birth of the first European hedge fund that runs a multimillion-dollar portfolio of professional soccer players, the value of which rises and falls with the players’ performances.

“The fans have always had an emotional investment without a [legal] financial one,” says a leading sports agent, one of the principals of the A.S.A. Sports Exchange, who prefers to remain nameless. “This is taking emotion and putting it to financial use. Screw this putting 300 bucks into a pot at work. This is ‘everyone get online and open your account at Ameritrade.’ The fans will be in the same position as the owners of sports teams—they’ll be making money off [the players] or losing money on them. They’ll just have more flexibility than the owners.” [...]

ProTrade, co-founded by Mike Kerns.

ProTrade – (San Mateo, California, U.S.A.) — Cross between a prediction market game and an American-style fantasy football game. Traders buy and sell shares in players. These stocks pay dividends according to how well a player performs in each game. — Founded in 2005 by Jeff Ma and Mike Kerns, and advised by Justin Wolfers.

NEXT: ProTrade co-founder Jeff Ma gives inklings.