The vetting of the many potential Democratic vice president nominees was not as secretive as I thought. – Bo Cowgill was right, in hindsight.

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The New York Times has a recount on how Barack Obama reached his decision on Joe Biden. The final decision was probably made 10 days ago, while Barack Obama was vacationing in Hawaii.

[…] Mr. Obama’s decision had as much to do with Mr. Biden’s appeal among white working-class voters and compelling personal story, and his conclusion that the Delaware senator was &#8220-a worker.&#8221-

The important information in the NYT piece is that Barack Obama personally called governor Bill Richardson &#8220-late last week&#8221- to announce him that he was not considered anymore. That&#8217-s around the time the Joe Biden rumor began to have more weight in the media circles &#8212-see the InTrade chart below.

Bo Cowgill, back in May 2008 (when I started to act as a prophet of doom):

This is dumb. Cover them if something interesting happens. Maybe your theory will turn out to be wrong. Anyhow: Although the decision is made in secrecy, the Presidential nominees have a number incentives which we have plenty of information about. Specifically:
* They want someone who will balance their tickets in terms of geography, race and class.
* They want someone who will help with weak areas of their campaigns.
* They want someone who will be a good campaign surrogate — giving good speeches and attacking the opponents effectively.
* They want to avoid a VP who will de-motivate or offend the base.
* They want to avoid someone with a bunch of skeletons in the closet such as angry ex-wives, out-of-wedlock kids, etc.
* Etc etc.
Anyhow, I don’t see any reason to ignore these markets in case something interesting happens. I read Midas Oracle so that I don’t *have* to read a whole bunch of other websites!

Bo Cowgill was on the right track, now that I think of it &#8212-in a society where everything leaks out.

On the opposite of the spectrum, Tom Snee was too much extreme in his view:

According to Tom Snee of the Iowa Electronic Market, at Iowa University, futures markets need more hard information than they get in the veepstakes, to reliably predict a result.

Markets are very good at predicting elections, he says – but not choices being made inside Barack Obama&#8217-s or John McCain&#8217-s head.

Justin Wolfers was more measured.

So, Bo Cowgill and Justin Wolfers are the winners, on that one.

I was partially wrong. I am a bit too extreme, sometimes. (Did someone else notice that? :-D ) I need to learn more about&#8230- granularity.

PS: On the Republican side, now&#8230-

Price for 2008 Republican VP Nominee (others upon request)(expired at convention) at intrade.com

Who will be the Republican Vice Presidential Nominee?

Barack Obama + Joe Biden – THE PREDICTION MARKETS NAILED IT… triple alas (for my reputation as a world-wide prediction market pundit, and for the debate on the different quality of the various primary indicators out there).

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“Friend &#8212- I have some important news that I want to make official. I’ve chosen Joe Biden to be my running mate.”

Some blogger says his wife is fantastic.

New York Times portrait of Joe Biden.

UPDATE: Barack Obama&#8217-s speech + Joe Biden&#8217-s speech

I think it is the worst pick ever. What a blunder. Joe Biden (a D.C. insider) is unpopular and gaffe prone. Plus, that choice shows that Barack Obama is insecure when it comes to foreign policy. An emphasis on the economy and, thus, on a successful gubernatorial experience would have been better.

Kathleen Sebelius was the one to pick. She is my vice president. (And Ron Paul is my president. :-D )

I have over-estimated the secretiveness of Barack Obama&#8217-s decision process. The chart above obviously shows that the Joe Biden narrative leaked out to reporters was beamed out for a purpose: testing the Obama-needs-a-VP-who-is-strong-in-foreign-policy argument, and letting the Press do the final vetting on gaffe-prone Joe Biden.

InTrade CEO John Delaney (along with the HubDub and BetFair people) will now brag on his marketing material that his prediction exchange did forecast Joe Biden as the Democratic vice president nominee.

What&#8217-s bad in all that (other than I have an egg on my face [*] ) is that we won&#8217-t have a public debate on the different quality of the various primary indicators, and how that conditions the accuracy of the prediction markets.

[*] I have an egg on my face, but Caveat Bettor has a whole omelet on his. :-D

While InTrade CEO John Delaney is deceiving the journalists to sell his wares, Tom Snee of the Iowa Electronic Markets is telling them the truth: BEWARE THE VP-CANDIDATE PREDICTION MARKETS, THEY JUST AGGREGATE RUMORS.

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BBC News:

According to Tom Snee of the Iowa Electronic Market, at Iowa University, futures markets need more hard information than they get in the veepstakes, to reliably predict a result.

Markets are very good at predicting elections, he says – but not choices being made inside Barack Obama&#8217-s or John McCain&#8217-s head.

Thank God for the BBC.

Thank God for the Iowa Electronic Markets.

Shame on John Delaney &#8212-over 3 generations of Delaneys.

Other than Tom Snee (the IEM spin doctor), Chris Masse and Justin Wolfers are the only prediction market analysts to have sent out warnings about the VP-candidate prediction markets.

Mine is 2.6 times longer than John Delaneys one.

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YOU SHOULD READ: My list of LinkedIn connections is 2.6 times longer than John Delaney&#8217-s one. I have 101- he has only 38. Pfff&#8230- He is so behind. He&#8217-ll never catch up.

Do join the &#8220-Prediction Markets&#8221- group at LinkedIn.

Forecasting Principles should index BusinessWeek.

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Andreas Graefe,

Please, index the BusinessWeek news article (see the page #2, too) on your IIF webpage.

I believe it&#8217-s an Earth-shattering piece featuring major thinkers of the field of prediction markets, who were interviewed by that bright journalist &#8212-smart enough to sense who are the truly important prediction market experts who count nowadays.

And if you need an alternative title:

BusinessWeek: The most famous and forward-thinking experts in the field of prediction markets talk about the future regulations of event derivative exchanges in the United States of America. – (page #2) – (print page)

Why did Chris Masse opted for the excluded commodities and the DCMs way, since we know that stringent CFTC regulations can kill our lite, real-money prediction markets?

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My first argument is to value hedging, its role in the economy, and its function as a booster for the derivative exchanges (including event derivative exchanges). My second argument is to say that it&#8217-s up to the CFTC to lower the regulatory costs, again, as they did a first time for HedgeStreet (the first non-intermediated derivative exchange) in 2004. I understand that my argumentation is special, and some of you might think that I have a screw lose. That&#8217-s a fair criticism. That&#8217-s OK &#8212-I can take it. :-D

My 2 comments to the CFTC:

My first comment-

My second comment.

I&#8217-ll probably end up in the group of losers, after the CFTC will have ruled. :-D

Jason Ruspini has, of course, a much more elaborated view, and you might refer to his comment to the CFTC &#8212-for a more vertical argumentation.

But I also support Tom W. Bell&#8217-s argumentation, because, obviously, his argumentation has value. (Other people have interesting takes, too.)

Speaking of Tom W. Bell, take a look at his series of comments responding to Jason Ruspini&#8217-s critiques.

Previous blog posts by Chris F. Masse:

  • The FaceBook profiles of the 2 most important men of the field of prediction markets
  • THE HUMAN GADFLY WHOSE OBJECTIONS ROBIN HANSON IS DUCKING…???…
  • Google now considers Midas Oracle as a major blog.
  • Horizon 2015: A long-term strategic perspective for the real-money prediction markets
  • Join our group at LinkedIn to have your “Prediction Markets” badge on your profile. It’s ‘chic’. (“Groups” info should be set as “visible”, in your profile options.) We are 63 this early Saturday morning —keeps growing.
  • If you have been using PayPal to fund your InTrade, TradeSports or BetFair account, please, check that horror story.
  • 48 hours after the launch of the “Prediction Markets” group at LinkedIn, we have already 52 members —both prediction market luminaries and simple people (trading the event derivatives or collecting the market-generated probabilities).

Chris Masses first comment to the CFTC on event markets (prediction markets)

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Chris F. Masse
Midas Oracle
cfm &#8212-&#8211- midasoracle &#8212-&#8211- com
chrisfmasse &#8212-&#8211- gmail &#8212-&#8211- com

July 6th, 2008

Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St. NW
Washington D.C. 20581

Attention:
Office of the Secretariat- secretary@cftc.gov

Reference:
Concept Release on the Appropriate Regulatory Treatment of Event Contracts
73 FR 25669

My name is Chris F. Masse, and I&#8217-m the publisher of CFM (a vertical portal to prediction markets, which is the only one I know of that lists extensively the URLs of all the world&#8217-s play-money and real-money prediction exchanges)

http://www.chrisfmasse.com/

and Midas Oracle (a group blog on prediction markets, which is the most popular resource on this topic).

http://www.midasoracle.org/

I&#8217-ve been covering the prediction market industry since 2003 (when the brouhaha caused by the Policy Analysis Market attracted the attention of many). I would like to give my input to the CFTC on the subject of real-money prediction exchanges.

First of all, let me say that I welcomed:

#1. The CFTC&#8217-s decision to investigate and approve HedgeStreet&#8217-s application as a DCM in 2003 and 2004 (in spite of the opposition of the Chicago Mercantile Exchange)-

http://www.hedgestreet.com/abouthedgestreet/pressreleases/pressrelease_1.html
http://www.hedgestreet.com/faq/
http://www.financial-spread-betting.com/hedgestreet-application.pdf
http://www.cftc.gov/files/submissions/comments/comdcm038cme.pdf

#2. The CFTC&#8217-s decision to publish a concept release on &#8220-event markets&#8221- in May 2008 (73 FR 25669).

http://www.cftc.gov/lawandregulation/federalregister/proposedrules/2008/e8-9981.html

Just a technical note, before I give you my thoughts. In the following, I call &#8220-prediction market&#8221- the specific market where one particular event derivative is traded. (For instance, the &#8220-Barack Obama will be elected US President in November 2008&#8243- prediction market.) And I call &#8220-prediction exchange&#8221- the general marketplace where many prediction markets (on political elections and other events) are traded. (Hence, I call HedgeStreet a &#8220-prediction exchange&#8221-).

Please, allow me to give you my thoughts on the subject of real-money prediction exchanges:

ABOUT DISPERSED INFORMATION PRICED IN EVENT DERIVATIVE MARKETS, EXCLUDED COMMODITIES, DCMs, AND EXTENDING THE COMMENTING PERIOD ON THE CFTC&#8217-s CONCEPT RELEASE ON &#8220-EVENT MARKETS&#8221-.

#1. I fully agree with the point #2 made by professor Vernon Smith in his comment (CL01) to the CFTC.

http://www.cftc.gov/stellent/groups/public/@lrfederalregister/documents/frcomment/08-004c001.pdf

The information aggregation mechanism that constitutes the essence of each prediction market (for instance, the &#8220-Barack Obama will be elected US President in November 2008&#8243- prediction market), and the objective probabilistic predictions generated by all these information aggregation mechanisms, are of high social utility.

#2. I fully agree with HedgeStreet in their comment to the CFTC (CL12) that political elections qualify as &#8220-excluded commodities&#8221-.

http://www.cftc.gov/stellent/groups/public/@lrfederalregister/documents/frcomment/08-004c012.pdf

The point made by HedgeStreet about economic consequences, risk management and hedging is extremely important with regards to:
– the future revenues of the for-profit, commercial companies who would be operating the real-money prediction exchanges on political elections (since hedging-oriented derivative markets experience much more volumes than speculative-only betting markets)-
– the financial innovations, which would be created by this process, and whose benefits will, on the long term, spread throughout society (just like what has happened with the traditional derivatives).

However, I notice that HedgeStreet does not state specifically whether the topics other than political elections (mentioned in the CFTC&#8217-s concept release on &#8220-event markets&#8221-) qualify, too, as &#8220-excluded commodities&#8221-.

This issue is the cornerstone of the discussion on &#8220-event markets&#8221-. In the concept release, the CFTC mention many other prediction markets than those about political elections. I saw only one comment (from Jason Ruspini, CL11) that elaborates in detail about non-political &#8220-event markets&#8221- &#8212-as of Sunday, Juy 6th, 2008, one day before the deadline for the commenting period.

http://www.cftc.gov/stellent/groups/public/@lrfederalregister/documents/frcomment/08-004c011.pdf

Hence, I believe that the CFTC do not (as of this Sunday) have enough pieces of external opinions about this important issue to make their determination about the regulatory status of &#8220-event markets&#8221-.

I am asking the CFTC to extend the deadline to September 7th, 2008.

I believe that since the most interesting comments (other than Vernon Smith&#8217-s one, which appeared the first in May 2008) were made the last week preceding the July 7th deadline, there wasn&#8217-t enough time for the previous commenters or some other commenters to agree or disagree with those recent comments.

On top of all that, I understand that some people and organizations might well submit their comment on Sunday, July 6th, 2008 &#8212-the day before the deadline for the closure for the comments. I know that law professor Tom W. Bell will do so. It is rumored that 2 prediction exchanges will do so, too. It will be impossible for other commenters to assess those last comments, and give their opinion about those to the CFTC.

I believe that more people and organizations would come forward in the coming 2 months with interesting opinions about the &#8220-excluded commodities versus exempt commodities&#8221- debate (or some say, the &#8220-jurisdiction vs. exemption&#8221- debate), which is, as I understand it, the cornerstone of the CFTC&#8217-s concept release on &#8220-event markets&#8221-. Indeed, some business media organizations I know of will publish news articles about this debate, after the July 7th deadline. Hence, many more people will be drawn in the conversation about &#8220-event markets&#8221-, and we will all benefit from their input.

As I said, one one hand, the debate needs more external comments from people arguing that non-political events are &#8220-excluded commodities&#8221-.

On the other hand, the debate needs more external comments from people arguing that about the &#8220-exempt commodities&#8221-, &#8220-ECMs&#8221-, or &#8220-no-action letter&#8221- points of view. The American Enterprise Institute&#8217-s public petition of May 2008, the concept release of May 2008, and the comments sent to the CFTC published on the CFTC website as this Sunday, do not give many legal details about this side of the argument.

Pushing the deadline to September 7th, 2008 will allow another round of informal and formal discussions between the two sides of this important issue.

Already, one commenter (Jason Ruspini) is on the record publicly saying that, had he read the HedgeStreet&#8217-s comment to the CFTC, he would have put more emphasis on some of his arguments.

http://www.midasoracle.org/2008/07/05/my-response-to-the-cftc-on-event-contracts/

It&#8217-s for all those reasons that I am asking the CFTC to extend the deadline to September 7th, 2008.

#3. I fully agree with HedgeStreet in their comment to the CFTC (CL12) that the DCMs (and especially a non-intermediated DCM like HedgeStreet
) should be allowed to operate prediction markets on political elections, as discussed by the CFTC&#8217-s concept release of May 2008.

As I said above, not enough commenters have addressed the specific issue of how the non-political &#8220-event markets&#8221- should be regulated (or semi regulated, thru the &#8220-exemption&#8221- way). Hence, I can&#8217-t see how the CFTC can&#8217-t reach a wise decision on the issue of which type of &#8220-event markets&#8221- should be offered by which type of derivative exchanges (DCMs, ECMs, or exchanges that are granted a &#8220-no-action&#8221- letter).

Again, I am asking the CFTC to extend the deadline to September 7th, 2008.

Thanks for listening,

Chris F. Masse
Panorama B, Green Side
305, avenue Saint Philippe
Les Templiers, Sophia–Antipolis
06410 Biot, Alpes-Maritimes
France, European Union

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RELATED POSTS:

– Chris Masse&#8217-s second comment to the CFTC on &#8220-event markets&#8221- (prediction markets)

– What the CFTC is asking.

Chris Masses second comment to the CFTC on event markets (prediction markets)

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Chris F. Masse
Midas Oracle
cfm &#8212-&#8212- midasoracle &#8212-&#8212- com
chrisfmasse &#8212-&#8212- gmail &#8212-&#8212- com

July 6th, 2008

Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St. NW
Washington D.C. 20581

Attention:
Office of the Secretariat- secretary@cftc.gov

Reference:
Concept Release on the Appropriate Regulatory Treatment of Event Contracts
73 FR 25669

Just a technical note, before I give you my thoughts. In the following, I call &#8220-prediction market&#8221- the specific market where one particular event derivative is traded. (For instance, the &#8220-Barack Obama will be elected US President in November 2008&#8243- prediction market.) And I call &#8220-prediction exchange&#8221- the general marketplace where many prediction markets (on political elections and other events) are traded. (Hence, I call HedgeStreet a &#8220-prediction exchange&#8221-).

Please, allow me to give you my thoughts on the subject of real-money prediction exchanges:

ABOUT THE INFORMATION AGGREGATION MECHANISM, FORECASTING, THE LIQUIDITY OF THE SOCIALLY VALUABLE PREDICTION MARKETS, THE DEVELOPMENT OF A US-BASED PREDICTION MARKET INDUSTRY, AND THE PROTECTION OF RETAIL TRADERS

The information aggregation mechanism functions well only if there are enough traders. Probabilistic predictions (which are of interest of the economists cited in the CFTC&#8217-s concept release) are generated only when there is enough liquidity, that is, when many traders come speculating on an event derivative market (e.g., on the topic of the next political election). Just because forecasters are interested in a topic and want to generate a market-based probabilistic prediction does not mean that traders will flock en masse. Market-generating forecasting is an offspring of the trading activity- if you have too little liquidity, you don&#8217-t have any trustworthy probabilistic prediction.

The socially valuable prediction markets should meet 3 criteria:
– their contracts should be very well drafted, so that the probabilistic predictions generated would be useful to society-
– a sufficient number of traders should like the topic-
– there should exist advanced, primary indicators which traders can follow to get early information (e.g., polls, among other sources of information, in the case of prediction markets on political elections).

Here&#8217-s a counter example. Yahoo! Research scientist David Pennock (one of the most active and well regarded researchers in this field) has created a set of prediction markets regarding the percentage share of web searches made in the US in 2008, for each Internet search engine (Google, Yahoo!, etc.) That would be extremely valuable, on the paper. Unfortunately, those sets of prediction markets have attracted only a fistful of traders:
http://www.intrade.com/aav2/trading/tradingHTML.jsp?evID=78364&amp-eventSelect=78364&amp-updateList=true&amp-showExpired=false
Hence, no trustworthy probabilistic predictions were generated.

The CFTC should take with a grain of salt the 2008 petition organized by the American Enterprise Institute
http://www.reg-markets.org/publications/abstract.php?pid=1276
that states that &#8220-not-for-profit research institutions&#8221- and &#8220-government agencies&#8221- should be allowed to run US-based, real-money prediction exchanges, for the good of society. Just because an organization is smart and fascinated by the prediction markets does not mean that its executives and managers will be capable of drawing traders. Obviously, prediction exchanges should be run by trading specialists and event derivative professionals, and properly regulated. No good will be done by the CFTC if amateurs are allowed to run un-regulated, real-money prediction exchanges.

I see 2 important keys for the development of socially valuable prediction markets.

a) The socially valuable prediction markets (which are not very popular, other than the ones on political elections) should be organized by the generalist prediction exchanges that draw traders en masse because they offer prediction markets on very popular topics.

Sports is a popular topic. If the CFTC go to the website of TradeSports http://www.tradesports.com/ , they will see that TradeSports links, on its frontpage, to the InTrade prediction markets at http://www.intrade.com/ and, thus, send the TradeSports traders to the InTrade prediction markets, which is obviously good for InTrade&#8217-s liquidity in general, and especially good for InTrade&#8217-s socially valuable prediction markets. In the same manner, the prediction markets on political elections organized by BetFair UK http://www.betfair.com/ are located within their central prediction exchange that is mainly devoted to sports.

The hard fact is that the most popular topic among individual traders (the retail customers of the prediction exchanges) is sports. As long as US laws and regulations won&#8217-t allow US-based, real-money prediction exchanges to organize prediction markets on the topic of sports, many US event derivative traders will give their business to offshore, real-money prediction exchanges who accept to take money from US residents (as it is the case with TradeSports-InTrade Ireland).

I understand, though, that the CFTC is working under a jurisdiction that presently outlaws prediction markets on sports.

b) The executives of the popular, real-money prediction exchanges should be willing to create socially valuable prediction markets by collaborating with outside researchers who specialize in certain verticals.

As of today, InTrade is the only real-money prediction exchanges that fill these 2 criteria &#8212-a) and b). InTrade&#8217-s executives and managers have deployed a considerable effort to create and run an impressive number of socially valuable prediction markets.

BetFair UK have chosen not to develop socially valuable prediction markets, alas &#8212-other than those on UK politics, which are well developed and of high social utility. And HedgeStreet does not have yet the CFTC&#8217-s stamp of approval to run markets of event derivatives non-financial topics, since that&#8217-s the purpose of the May 2008&#8217-s concept release.

The economists Justin Wolfers, Eric Zitzewitz, Robin Hanson, Koleman Strumpf and David Pennock (among others) have collaborated with InTrade Ireland to frame interesting questions. Obviously, the research institutions which those economic scientists are affiliated with (e.g., universities, colleges, business schools) have no business running real-money prediction markets.

If the &#8220-not-for-profit research institutions&#8221- and &#8220-government agencies&#8221- want to develop socially prediction markets, then they should do it in cooperation with established, popular, regulated, real-money prediction exchanges, who know what they are doing.

(In passing, I fully support Tom W. Bell&#8217-s point made in the 5th paragraph of his petition. The CFTC should not favor the not-for-profit prediction exchanges at the expense of the for-profit prediction exchanges. Tom W. Bell&#8217-s comment to the CFTC has not yet appeared on the CFTC website, as I type this. http://agoraphilia.blogspot.com/2008/07/lets-tell-cftc-where-to-go.html )

As I said, I follow the prediction market industry since 2003, and the 2 most common mistakes I see made by
the people proposing brand-new socially valuable prediction markets are that:
– they forget that the event derivative traders should have fun-
– they forget that, for each prediction market, there should exist advanced, primary indicators that traders should rely on to inform their trades.

I want to tell the CFTC that most people who talk about creating brand-new socially valuable prediction markets are totally unaware of these 2 basic rules.

In the beginning of this comment, I said that prediction markets are forecasting tools (and, hence, decision-support tools) if, and only if, there is sufficient liquidity. I also noticed that the world&#8217-s most liquid socially valuable prediction markets are offered by 2 exchanges (TradeSports-InTrade and BetFair) who use popular prediction markets (on sports, the fact is) to support the marketing of less popular, socially valuable prediction markets. (After making that argument, I acknowledged that the CFTC currently works for a legal environment that prohibits prediction markets on sports.)

My point here is to emphasize the uber importance of liquidity on socially valuable prediction markets. In my view, the best situation is when a big, generalist, real-money prediction exchange organizes socially valuable prediction markets and helps them to thrive. Only InTrade Ireland has done that, so far. My suggestion to the CFTC would be to create a legal environment such that their liquidity could be &#8220-repatriated&#8221- to the US, on a &#8220-InTrade USA&#8221- real-money prediction exchange.

A related issue is that the CFTC should be concerned about HedgeStreet&#8217-s financial health. After its third round of funding, HedgeStreet raised a total of $24.9 million.

http://www.hedgestreet.com/abouthedgestreet/pressreleases/pressrelease_21.html

Lately, HedgeStreet was aquired by an offshore investor for $6 million.

http://www.hedgestreet.com/abouthedgestreet/pressreleases/pressrelease_32.html

Obviously, there has been destruction of wealth, here.

The CFTC did a great job in 2004 when it approved HedgeStreet&#8217-s application as a Designated Contract Maker (DCM). The CFTC should now finish the job by creating a legal environment favoring the profitability of HedgeStreet and of other non-intermediated DCMs (e.g., InTrade USA, or BetFair USA, or TradeFair USA) &#8212-which I hope will be started up in the future in the US.

What I am afraid with the May 2008&#8217-s concept release on &#8220-event markets&#8221- is that the CFTC does not look into the real issues: the liquidity of socially valuable prediction markets, and the profitability of US-based companies operating real-money prediction exchanges (non-intermediated DCMs).

I&#8217-m afraid that all the solutions consisting in &#8220-exemptions&#8221- and &#8220-no-action&#8221- letters are false solutions that do not address the real issues.

Finally, for the issue regarding the protection of retail traders, I suggest that the CFTC looks into the worst scandal that occurred in the field of prediction markets &#8212-the &#8220-North Korea Missile prediction market&#8221- scandal. I am sad to say that InTrade Ireland acted in the worst way possible, and, thus, have indelibly tarnished their reputation, alas.

http://www.midasoracle.org/predictions/nkm-scandal/

Thanks for listening,

Chris F. Masse
Panorama B, Green Side
305, avenue Saint Philippe
Les Templiers, Sophia–Antipolis
06410 Biot, Alpes-Maritimes
France, European Union

&#8211-
&#8211-

RELATED POSTS:

– Chris Masse&#8217-s first comment to the CFTC on &#8220-event markets&#8221- (prediction markets)

– What the CFTC is asking.

What I said to BusinessWeek

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BusinessWeek&#8217-s Ricky McRoskey:

Experts expect the initial reaction to CFTC regulation to be more low-cap, nonprofit markets like the one created by the University of Iowa. Some doubt the forecasting power in these small-scale markets, since there wouldn&#8217-t be enough monetary incentive for traders to seek and discover information. &#8220-We do not need nonprofit prediction exchanges,&#8221- says Chris Masse, editor and publisher of the prediction market blog midasoracle.org. He says that [offshore] exchanges like Intrade and Betfair, which are for-profit, have the capital to continually offer more cutting-edge pricing systems and additional contracts while nonprofits like the IEM have not.

I meant that real-money prediction exchanges that make profits do support innovation (see BetFair&#8217-s new bet matching system and starting-price system) and are well positioned to foster socially valuable prediction markets (see the huge effort that InTrade is making in this direction).

Voila. :-D

Psstt&#8230- You&#8217-ll notice that I am the only one in that story to mention and speak favorably of InTrade-TradeSports and BetFair-TradeFair. :-D