Betchas Continuing Legal Struggles

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You can keep up with the news about Betcha, the Seattle-based betting platform suffering the continued attentions of the Washington State Gambling Commission through the Betcha blog.

Founder Nicolas Jenkins has the latest update: Now We Know Why That Search Warrant Came So Easy:

We just found out yesterday that —- surprise! —- the Commission wasn’-t exactly forthcoming with the judge when it applied for the warrant. In its answer to our complaint, the Commission admitted that, when it made its application to Judge Paula Casey, it did not mention that we had filed suit against it the day before. In the answer they referred to it as an “-alleged suit,”- but it’-s hard to see what was “-alleged”- about it. I was at the Commission’-s office when our counsel handed Deputy Commissioner Sharon Reese a copy of the complaint, and we notified her again later in the day by e-mail that we had filed it.

Also recently recently posted: Now Louisiana Wants Us —- For Seventy Cents.

Jenkins said that he has heard that the state of Louisiana has filed arrest warrants for him and two of his employees, and is seeking extradition to Louisiana. As of the posting the specific charges were unknown, but he speculates the allegations concern the state’-s law against “-gambling by computer.”- Jenkins comments in response that the Louisiana law won’-t apply to Betcha for the same reason that the Washington law doesn’-t: the Betcha service doesn’-t meet the legal requirements for gambling.

As it turns out, Jenkins reports that in the 30 days the betting platform was in operation, it took exactly 4 bets from a single Louisiana resident. Revenue after Betcha’-s promotional credits? 70 cents.

The Louisiana Gambling by Computer law is available from the website of the state legislature.

UPDATES from the Betcha blog:

PREVIOUSLY on Midas Oracle:

Leading political indicators

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American politics does not suffer from a shortage of polls. Zogby. Gallup. Rasmussen. SurveyUSA. Mason-Dixon. Polimetrix…- In an information-glutted world, what matters is not the supply of sources, but the ability to glean trustworthy information from the larger swath of poor data.

Different polling organizations have different strengths and weaknesses. Some use “-tight screens”- to scope out likely voters- others simply sample registered voters, without making any attempt to tighten the survey base to “-likely voters.”- Tight screening is especially crucial to gauge the true state of a primary, when committed base opinion can diverge significantly from less engaged moderate voters, and more importantly, influence those moderates over time to converge to the more partisan perspective. Some use human interviewers, although recently that has given way to IVR (Interactive Voice Recording) polls (the kind where a computer talks to you and asks you to “-press 1 if you will definitely support X, 2 if probably…-”-)

I have found tight-screen, IVR polling to be the most reliable. IVR not only has no marginal cost, but it eliminates all the biases resulting from trying to give the most pleasant-sounding answer possible (the “-sexy grad student effect”- that exaggerated Kerry’-s margin by 15 points in Pennsylvania 2004 exit polling, for example). IVR possible responses can also be randomly rotated from respondent to respondent to eliminate recency biases (first and last responses in a list exaggerated because those are at the forefront of a person’-s memory of the list, not because s/he will vote that way).

The poster-child of IVR tight-screen polling success is Scott Rasmussen’-s Rasmussen Reports. I have only tracked them over the last two election cycles (2004 and 2006), but considering that 2004 was a GOP wave and 2006 a Democratic wave election, I think the data is sufficient to form a valid judgment. Rasmussen’-s track record is simply stupendous. It predicted 49 out of 50 states in 2004 correctly, usually within two percentage points of the actual outcome. In 2006, Rasmussen achieved similarly impressive results —- all the more impressive when you consider that most polling models tend to err in favor of one party or the other. (“-Likely voter”- models tend to favor Republicans, and registered voter-based models tend to exaggerate Democratic strength.)

My other favorite sources include Gallup and Mason-Dixon. Gallup comes closer to the “-registered voter”- model than the tighter Rasmussen model, so Gallup usually lags tighter-screen polls. By election eve, however, the two models usually converge. Gallup’-s election-eve congressional generic vote is hands-down the best in the business. However, their numbers for party primaries have poor predictive value, because they don’-t make much effort to hunt down likely voters.

Differing survey methods can yield very different results. Rasmussen has long shown a much closer Democratic nomination race than most established, “-registered voter”- pollsters —- most recently, it showed a 32-32 tie between Clinton and Obama, with Edwards wallowing 15 points behind. Gallup’-s last numbers tightened drastically to a 31-26 race between Clinton and Obama (Gallup’-s numbers are also hard to compare with Rasmussen’-s because Gallup includes Gore).

Many smart Democrats, notably MyDD’-s Chris Bowers, believe that Gallup and others are mistakenly including lots of “-low information voters”- who simply lag the opinions and thought processes of more-attuned Democratic partisans.

Now that more establishmentarian polling firms are coming in line with Rasmussen’-s results, one can infer that the likely voter/ Chris Bowers theory has gotten the better of the argument.

A survey of pollsters wouldn’-t be complete without knowing which ones to stay away from. Stay away from Zogby and CNN polling. James Carville’-s and Stan Greenberg’-s DemocracyCorps polling outfit is not trustworthy, either —- for example, when they doubled the percentage of blacks in an October 2006 survey sample to bump the Democrats’- generic advantage by 5 points, to reinforce the Democratic narrative of a building wave.

Lastly, partisan pollsters in a competitive election season should always be taken with a grain of salt —- they will use heuristic subtleties to create the best impression possible for their party’-s candidates. Strategic Vision, a Republican outfit, deserves a three- or four-point handicap. Franklin Pierce generated a dubious Romney result for New Hampshire right after its lead pollster, Rich Killion, went to work for the Romney campaign. Such polls should be trusted only as a last resort.

For those of us who wish to divine movements in politics futures, discerning trustworthy data from bad data is paramount. Poll-rigging is the high art of Washington, DC, and as any interest group —- or candidate —- knows, it’-s easier than easy to produce a poll that diverges wildly from reality, if the heuristics are threatening enough.

(cross-posted from my blog, The Tradesports Political Maven)

Prediction markets vs. Experts (a.k.a. pundits)

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Via betting expert Niall O’-Connor, this Slate piece:

But in the run-up to this year’-s midterms, Intrade futures prices are everywhere. RealClearPolitics offers “-Live Intrade Quotes”- alongside its polling summaries. HuffingtonPost now posts them on the front page in a snazzy, multicolored bar graph. The HuffPo graphics won’-t help with Tradesports/Intrade’-s defense. The headline shouts “-Midterm Betting Odds,”- and the caption adds, “-Odds based on people betting real money on the Tradesports website.”- Is betting real money on the midterms a form of online gambling?

My Answer: No. TradeSports-InTrade is a prediction exchange, which can give more objective outcome probabilities than bookmakers or sportsbooks, and the Huffington Post does a diservice to the public in presenting that as “-betting odds”-.

Never mind the current Congress – the real value of political futures markets like Intrade is their potential to put someone else out of business: pundits. Intrade’-s predictions are erratic, unreliable, and meaningless – in other words, a perfect market in the conventional wisdom. Most Washington talking heads are just day traders in political gossip. Thanks to Intrade, you no longer have to listen to all the pontificators, because the market does it for you. In politics, it’-s often hard to tell the difference between the conventional wisdom and “-the wisdom of crowds.”- One man’-s CW is another man’-s WC. As further proof that the market works, this wisdom is now available for free – which is exactly what it’-s worth.

My Take: I agree with what I put in bold, but not with what’-s in between and after.

How important will the Unlawful Internet Gambling Enforcement Act be? Markets think pretty important.

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With news that the Unlawful Internet Gambling Enforcement Act has passed the House, all eyes seem glued on Washington to see just how regulation of online gaming is going to change the industry.

Looking at stockmarket reactions, it seems pretty serious.

From today’-s Guardian:

The online gaming industry’-s bet that American legislators would never get around to outlawing internet games such as poker went spectacularly wrong yesterday. An estimated ?4bn was wiped off the sector’-s value as share prices crashed after a weekend ambush by Washington.

Full story: http://www.guardian.co.uk/frontpage/story/0,,1886369,00.html.

I have already heard of at least one major bookmaker – Australian-based Centrebet (www.centrebet.com.au) – already closing the accounts of US-based clients.

While these early stock-market reactions look pretty serious, my guess is that these sorts of laws tilt the competitive landscape away from the larger more legitimate operations (like those public companies based in London), and toward the smaller (and more legally “-agile”-) firms operating in a less transparent manner. So perhaps this stockmarket reaction somewhat overstates the impact.

Stay tuned for more…- (Hat tip: Paul Tetlock and Sam Savage.)