Yearly Archives: 2008

Inkling Markets Advisory Board… which does not want to tell its name

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Via Daniel Horowitz (Business and Technology Consultant)

Inkling Markets&#8217- Advisory Board (curiously named &#8220-Friends Of Inkling&#8221-):

  1. Bo Cowgill, Google Inc. &#8212- Product developer, expert on decision markets for Google- creator of Google&#8217-s prediction market and co-author of Using Prediction Markets to Track Information Flows: Evidence From Google.
  2. George Gendron, Clark University &#8212- Founder and director of the Innovation and Entrepreneurship Program at Clark University- former Editor-in-Chief of Inc. magazine.
  3. Our Michael Giberson. :-D &#8212- His recently updated website states: *Update:* Beginning in August, 2008, Michael Giberson will be joining the faculty of the Center for Energy Commerce in the Rawls College of Business, Texas Tech University.
  4. Bob Johansen, Institute for the Future &#8212- Author of Get There Early: Sensing the Future to Compete in the Present and six other books- Distinguished fellow and former CEO of Institute for the Future (IFTF), a Palo Alto based think tank that does ten-year forecasting.
  5. Jane McGonigal, PhD, renowned gaming developer &#8212- Award-winning innovative game designer, researcher and analyst. MIT Technology Review named her as one of the top 35 innovators changing the world through technology.
  6. Russ Roberts, management consultant and professor, Northwestern University &#8212- A strategy and organization effectiveness consultant and professor at the Kellogg Graduate School of Management at Northwestern University.
  7. Philip Rosedale, Linden Lab / Second Life &#8212- Founder and chairman of Linden Lab, creator of the acclaimed 3D virtual world Second Life. In 2007, he was listed among Time Magazine&#8217-s 100 Most Influential People in the world.

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Playing fantasy sports is not gambling. The Unlawful Internet Gambling Enforcement Act includes a specific exemption for fantasy sports, provided the prizes are determined in advance and the imaginary teams dont correspond to any real teams.

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New York Post

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

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Let Prediction Markets Fight Terrorism.

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The Commodity Futures Trading Commission (CFTC)&#8217-s recent request for comments about the regulation of prediction markets includes a number of specific questions. I am not sure whether I will manage to write up answers to all of them before the July 7 deadline, but question in particular—question 14—has attracted my attention. The CFTC there asks, &#8220-Should certain underlying events or measures&#8211-such as those based on assassinations or terrorist activities—be prohibited altogether due to the social perception and impact of such events? What statutory or other legal basis would support this treatment?&#8221-

I answer the first part of question 14, &#8220-No,&#8221- (and thus need not answer the second part). I doubt that the CFTC wants to hear that sort of reply, frankly- I instead suspect that it wants a legal excuse to avoid the sort of political firestorm that followed the Pentagon&#8217-s proposal to create a Policy Analysis Market that included claims about assassinations and terrorist events. My draft answer to question 14 explains why I&#8217-m willing to risk disappointing the CFTC:

The CFTC should not forbid trading in claims based on assassinations, terrorist activities, or other criminal acts. Because event markets would offer only relatively thin and traceable trading, they would not offer an attractive investment option to anybody planning to profit from wrongdoing. A would-be terrorist would risk revealing both his plans and his identity if, for instance, he invested in a contract predicting another 9/11. He would instead find it more safe and profitable to simply short certain publicly traded stocks.

Furthermore, event markets in terrorist or criminal acts might benefit the public by revealing life-saving information. Suppose, for instance, that an anthropologist&#8217-s study of corrido culture convinced her that narcoterrorists had begun planning military raids on border checkpoints in Arizona and California. If she had the opportunity to buy terrorist event claims, she might both profit from her research and tip us all off about looming trouble. Sound public policy suggests that we should encourage that sort of trading—not forbid it.

To judge from their reactions to the Policy Analysis Market proposed by the Pentagon in 2003, politicians might need to learn more about the benefits of using trading to help predict assassinations or other terrorist events. That poses a public relations problem, however—not a legal one. The CFTC thus has no sound reason to presumptively forbid trading in contracts related to such events.

Notably, my answer to question 14 differs sharply from the answer offered by Jed Christiansen. He said, &#8220-There should never be any incentive to break a law, so there should never be any contracts that would pay someone if a law was broken.&#8221- I disagree, of course, but I thank him for stimulating me to offer an alternative take.

[Crossposted at Agoraphilia and Midas Oracle.]

Who will write to the CFTC?

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CONFIDENTIAL:

&#8220-The Law Professor&#8221-, &#8220-The Brain&#8221-, and &#8220-The Blogger&#8221- are among those who will each send a comment to the CFTC in the coming 2 weeks.

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UPDATE: This econ guy will write to the CFTC, too.

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UPDATE: Indeed, he did&#8230- brightly.

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The CFTC is going to close the comments in 16 days. We have 16 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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Paul Wolfowitz&#8217-s profile at the American Enterprise Institute

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PREVIOUSLY:

– 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.

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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.

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

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

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In the American Enterprise Institute’s proposals to legalize the real-money prediction markets in the United States of America, they advise the CFTC not to allow for-profit prediction market companies (like InTrade, TradeSports and BetFair) to operate socially valuable prediction markets &#8212-in a legal way, in the US.

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It&#8217-s a shame that our prediction market luminaries signed that piece of ****.

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Previously: CALL TO ACTION: Let’s fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with “event markets”.

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CALL TO ACTION: Lets fight so that the CFTC allows the FOR-PROFIT prediction exchanges to deal with event markets.

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The second feedback I have received about my speculative post goes like this: &#8230-If some believe that the CFTC might rule that &#8220-event markets&#8221- should be treated only by not-for-profit, IEM-like, prediction exchanges&#8230- &#8230-while some others think that&#8217-s not the case&#8230- &#8230-even though a powerful American think tank is advocating that only not-for-profit prediction exchanges be allowed to organize &#8220-event markets&#8221-&#8230- &#8230-then all that means that this issue is probably still up in the air&#8230- &#8230-and worth fighting for.

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I&#8217-m told people who favor for-profit prediction exchanges (and in their wicked mind, that includes the author of this post) should write to the CFTC.

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UPDATE: NOT-FOR-PROFIT&#8230- or&#8230- FOR-PROFIT&#8230- That is the question.

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

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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.

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NOT-FOR-PROFIT… or… FOR-PROFIT… That is the question.

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The dilemma goes like this:

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  1. If the CFTC allows for-profit prediction exchanges &#8211-&gt- that&#8217-s a good step forward (even though sports are excluded from the legal offerings)-
  2. If the CFTC allows only not-for-profit prediction exchanges &#8211-&gt- that&#8217-s a micro step forward (but still positive in the eyes of many).

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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.

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

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VIDEO: Max Keisers attempt at predicting the future -subjectively

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Overall, the TV show is based on a good concept (trying to predict future headlines), and I&#8217-m sure it will be a success in the end.

However, one big mistake Max is doing is to have female journalists. Sorry to say that, but if you are in the business of selling subjective predictions, you need to have credible predictors, with loud voice, charisma, and definitive attitude. Most women in journalism don&#8217-t display those qualities.

Max, fire the journalists and put real pundits on your TV show.

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Video

Previous blog posts by Chris F. Masse:

  • The letter David Pennock will never send out —well, we hope.
  • Monitor the web traffic of TradeSports.com, InTrade.com, BetFair.com, Betdaq.com, NewsFutures.com, HubDub.com, etc. —thanks to Google Trends.
  • Here’s the way to promote innovation for entry-order and analysis software packages —separate the 2 functions.
  • Ugly things happened before BetFair was invented
  • Tiny API delay for non-UK customers of BetFair —since all international BetFair bettors, traders and gamblers are now served from Malta, not from London.
  • CLOCK IS RUNNING FAST: 17 days to go, if we want to counter AEI’s push for not-for-profit prediction exchanges.
  • In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.

Will the CFTC allow FOR-PROFIT prediction exchanges to deal with event markets?

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The feedback I have received about my speculative post is that I put too much weight into the CFTC requesting that the prediction exchanges organizing &#8220-event markets&#8221- (event derivative markets that can&#8217-t be used for hedging risks) be not for profit &#8212-as the Iowa Electronic Markets is.

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Just below, in bold, are the phrase and the word I&#8217-m told I have mis-read.

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CFTC – (PDF file):

CFTC&#8217-s Concept Release on the Appropriate Regulatory Treatment of Event Contracts

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D. Legal Implementation

16. Is it appropriate for the Commission to direct certain or all event contracts onto markets that are regulated differently from and perhaps less stringently than DCMs? For example, it may be warranted or necessary to treat event markets that aggregate information solely for academic or research purposes, event markets set-up for internal corporate purposes, or event markets that offer exceedingly low notional value contracts to traders differently than markets that possess the attributes of traditional DCMs.

19. What are the benefits and drawbacks of permitting certain event markets to operate pursuant to Commission established conditions that are similar to the conditions under which the IEM operates?

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

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UPDATE: NOT-FOR-PROFIT&#8230- or&#8230- FOR-PROFIT&#8230- That is the question.

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

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