Ah, Kansas…- Barbecues, pickup trucks, rednecks, country music, and…- the local FOX News.
Despite that one blip on the radar [New Hampshire], Strumpf said futures are still the best way to predict the way things will go from here.
Spot the SIDEBAR (which is not located on the sidebar, actually), and click on the little square, just below “-video”-, to watch the report.
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Edward Wray:
We’-re one of the very, very few Internet betting companies that have never taken a bet out of the U.S., and that’-s because our view has always been it is illegal, which it clearly is now, and so long as it’-s illegal, we’-re not going to do it. That’-s a long-term strategy. Clearly some people made good money out of taking bets out of the U.S. in the short term, [and] have now found themselves in trouble with the authorities. Gambling should be regulated, we’-re very comfortable with that. There are things that need to be safeguarded — how you look after vulnerable people, how you make sure it’-s a clean, above board business, etc. — you don’-t achieve that by prohibiting business. You achieve it by regulating it. The U.S. has tried prohibition once before and it wasn’-t a roaring success. And I think they’-ll find the same thing here. I don’-t know how long it will take, but I’-m more confident than ever that the U.S. market will open up, and when it does, we will be right at the hub of it. It’-s frustrating to us that people in the U.S. can’-t access Betfair. But we go out of our way to make sure they can’-t because the law is the law and we will always respect that.
Tyler Cowen picks the market consensus over book-writing pundits:
Either the current market estimate of inflation is the best estimate available, or you know that it is wrong and you will be a very rich man. I find the former scenario more plausible.
Cowen is commenting on the Kevin Phillips book, Bad Money, recently out.
Of course book authors may be wary of going directly into the financial markets to wager their hard earned cash, which is why I have advocated prediction markets for pundits in which authors would have a chance to back their book-selling punditry with real money.
In Separating cheap talk from truly held beliefs, I wrote of political pundits with books:
Maybe they believe what they write, and would be willing to subsidize a prediction market out of their book royalties to demonstrate the strength of their convictions. Or how about the books from the current crop of U.S. presidential candidates—I wonder if these books contain any claims that are specific and substantive enough to be either true or false.
If such punditry-based prediction markets were common, mistaken-but-honest demagogues (those pundits who actually believe what they write, and are willing to stand behind it) would end up subsidizing more thoughtful analysts participating in the markets- correct honest demagogues would end up taking home larger financial rewards- and dishonest demagogues would dissemble, seek to avoid being pinned down on specific claims, and when pressed for actionable claims they would run and hide.
[Cross posted from Knowledge Problem]
BOTH.
But, contrary to what Lucy Berholtz thinks, the former will go further than the latter —-in my view.
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My thoughts about the Financial Times article on Bet2Give:
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Share:
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Robin Hanson on “-silly”- research topics:
[M]ost people think futarchy (government by [prediction] markets) is silly, even though most think it has a decent chance of performing well […].
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Decision markets and decision-aid markets are 2 great concepts pushed by Robin Hanson, the world’-s #1 researcher in the field of prediction markets. But they are just inventions, not innovations. What is important is to find out which population segment or which class of business executives find this stuff productive and helpful.
In that perspective, his presidential prediction markets at InTrade are good ideas, and the liquidity there (helped by an AMM) is decent enough. But they are just betting supports, right now. I haven’-t seen any opinion leaders taking them as a trusted source of information, which is the damn goal. We will see whether that comes true in the future.
If Robin Hanson were really serious in finding a killer app for his concept of decision-aid markets, he would of course come up with conditional prediction markets in the realm of sports, which is the most popular topic in the real-money prediction markets. Alas, I often have the impression that the academics in the field of prediction markets have profound disdain for sports prediction markets.
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Robin Hanson on seeking decision advice:
[…] We rarely seek out advice, and when we do it is usually on much smaller decisions. […] One reason we avoid getting advice is that it lowers our status relative to those who give advice. Of course this is also makes asking for advice a good way to flatter and supplicate. Not sure if this explains the puzzle though. But all this doesn’-t seem to bode well for fielding decision markets on the biggest organizational decisions.
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Allow me to digress from there. I think that the reading from the prediction markets is like an advice —-in that you have to accept the market message as an authority. If you are an expert with direct access to primary sources of information, I don’-t think you’-d rely on the message from the public prediction markets (which are information aggregation laggards). The big mistake from Robin Hanson and the others has been to sell the public prediction markets as tools for the decision makers. That could happen, but marginally, I believe. Experts and decision makers will firstly want to rely on their primary sources of information and on their analysis.
I think that the population segment which is the more likely to appreciate the consumption of market-generated probabilities would be composed of people who want a chopper view of world events. Prediction market journalism should satisfy this dashboard need.
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[Please note that the thoughts expressed above refer to the public prediction markets (as stated in the post title –think BetFair-TradeFair, InTrade-TradeSports, Betdaq, HubDub, NewsFutures, and Hollywood Stock Exchange) —not the enterprise prediction markets, which is a horse of another color.]
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Robin Hanson on decision-aid markets:
I don’-t recall ever turning down a chance to consult on prediction markets for a Fortune-500 company. If you know of an opportunity that I’-m missing, do let me know.
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Doc, are there more Fortune-500 executives and managers attending a conference on extra-terrestrials or a conference on finance? 
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BetFair Corporate (PDF file):
21st April 2008
BETFAIR WINS SECOND QUEEN’S AWARD FOR ENTERPRISE
Online betting company recognised for International Trade
BETFAIR, the UK’s biggest online betting company, is proud to announce that it has won its second Queen’s Award for Enterprise in its eight year history.
The 2008 award comes in the International Trade category, five years after Betfair was recognised in the Innovation category for creating the first successful betting exchange – a new concept which meant a better deal for customers and greater protections within the betting industry.
Since 2003, Betfair has grown substantially from a company with 100,000 users, of which only 8 percent were from outside the UK and Ireland, to a customer base in excess of one million where over 40 percent are international users.
Winners of the Queen’s Award are selected on the recommendation of the Prime Minister and an independent advisory committee. Betfair joins a select group who have been honoured twice since the inception of the awards in 1966 and it means the company will be able to carry the Queen’s Award emblem for another five years.
David Yu, Chief Executive of Betfair, said: “Upon winning our first award in 2003, our chairman and co-founder Edward Wray said that the company was looking forward to taking this great British innovation onto the global stage. Five years on, this award for International Trade is recognition of the strides we’ve made towards achieving that aim.”
“Betfair continues to pride itself on its innovation, integrity, fairness to customers and a determination to work in partnership with international governments and regulators. Those qualities are being recognised throughout the world and we now have operational bases in Australia and Malta to support over one million registered customers.”
With this award, Betfair joins the likes of Rolls Royce, Weetabix, Aston Martin and who have all been winners in the International Trade category in recent years.
Notes to Editors:
Since winning its first Queen’s award in 2003, Betfair has grown from 200 employees to over 1200 people in 2008, spread across its bases in Hammersmith, Stevenage, Malta and Australia. Driven by cutting-edge technology, Betfair enables customers to choose their own odds, even after an event has started. Betfair processes 5 million transactions a day, more than all of the European stock exchanges combined. Over half of all new customers now come from outside of the UK &- Ireland.
In addition to the exchange, Betfair now has an established games portfolio. Betfair Poker, Betfair Games, Betfair Casino and Betfair’-s accumulator products are hosted from Malta. It is an area that has seen significant growth and investment. The company is also developing new revenue streams by providing automated price feeds to third parties, establishing white-label exchanges and through its own Betfair Mobile product. In 2007, Betfair launched a new company, Tradefair, for those wishing to bet on financial markets.
Betfair is a licensed betting operator in the UK, and also operates under licenses in Australia, Austria, Italy and Malta. The company is seeking licences elsewhere within the European Union and further afield. Betfair welcomes regulation and is committed to paying the appropriate product fees in every market in which it operates.
Winners in the International Trade category for the Queen’s Award must demonstrate either “outstanding achievement… sustained over not less than three years, [or] continuous achievement in international trade, sustained over not less than six years”.
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Congrats to all BetFair-TradeFair employees, to all their traders, and to all their providers.
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The Queen’-s Award for Enterprise
The list
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Alas, that paper is not free to access.
Andrew McAfee’-s post reveals this:
Prediction markets were (sic) very much like stock markets. They contained securities, each of which had a price. […-]
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Not sure why they used the past tense.
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Prediction markets are in fact event derivative markets.
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Papers from Robin Hanson, Justin Wolfers, Eric Zitzewitz, Koleman Strumpf, etc., are free to download.
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Via George Tziralis, of Ask Markets.
Previously: Do Google’s enterprise prediction markets work?
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Previous blog posts by Chris F. Masse: