InTrade, Prediction Market to the Stars, Gets Banned From the U.S.

InTrade, the Dublin-based prediction market (i.e., betting platform) that we’ve written about regularly over the years (including a Q&A with its founder, John Delaney, who has since died), is under legal scrutiny from U.S. regulators and will therefore stop taking bets from U.S. customers. Here is InTrade’s statement, and here is the CFTC’s press release on the shutdown. What will U.S. regulators do next, outlaw online poker?

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.



View All Comments »
  1. Andrew says:

    This is odd because many states are moving to legalizing gambling and sports betting. Also, how is this different from the futures and options market?

    Thumb up 5 Thumb down 1
    • Mike B says:

      Hidden due to low comment rating. Click here to see.

      Disliked! Like or Dislike: Thumb up 4 Thumb down 9
      • Seminymous Coward says:

        Please differentiate between betting and investments* without reference to social norms. It seems to me as though betting is legal on a subject-variant basis. With perhaps the exclusion of assassination markets, this seems like petty moralizing to me.

        *Particularly abstracted joint investments like stocks, bonds, commodities futures, loans, and their assorted derivatives.

        Well-loved. Like or Dislike: Thumb up 6 Thumb down 0
  2. Josh says:

    “What will U.S. regulators do next, outlaw online poker?”

    If only we had some predictive mechanism to help us figure that out…

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 0
  3. Leighton Vaughan Williams says:

    Betfair is a sophisticated prediction market, with a huge client base and an exemplary record of forecasting accuracy, notably in respect of U.S. election races. Yet Betfair has achieved this status without ever taking bets from the U.S.

    Thumb up 5 Thumb down 4
    • Leighton Vaughan Williams says:

      Just to clarify my earlier comment, I was in no way criticizing Intrade’s policy of taking bets from the US. I was simply making the point that Intrade’s forecasting accuracy may not suffer from the recent announcement.

      Thumb up 4 Thumb down 1
  4. Doug says:

    Much like the poker ban this is silly. So many easy ways around this ban it’s ridiculous.

    Thumb up 3 Thumb down 3
    • Devin says:

      There aren’t easy ways around the online poker ban for professional player. That with the addition of Hugh barrier to entry for American casual players does effectively end online poker for American customers. VPNs are scanned for by the sites so that’s not an option. What is your “simple” solution? Comment reeks of someone who doesn’t actually play but assumes.

      Well-loved. Like or Dislike: Thumb up 7 Thumb down 0
  5. At the end of their media statement CTFC lists staff responsible for bringing the case, a bit like credits on a TV show. They’re obviously very proud of this.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0
  6. Annoyed says:

    Total waste of money and resources as usual. There is nothing threatening about this market other than it’s ability to predict things that governments would rather be left in the shadows. The stock market is nothing but high stakes gambling that is cheered on every day. Money has been equated to speech by SCOTUS and now Americans can’t use their “speech” to predict the outcome of events? Hypocrisy much?

    Well-loved. Like or Dislike: Thumb up 13 Thumb down 2
    • James says:

      Although one can gamble in the stock market (shorting, buying on margin, etc), for most people it’s no more gambling than any other purchase in a market. If I purchase a few chickens, and plan to make a steady income selling eggs and raising more chickens, is that gambling?

      When I buy a stock which a) pays dividends, and b) may well increase in value, why that any more gambling than my chicken farm?

      Thumb up 1 Thumb down 4
      • Seminymous Coward says:

        From a strict literal standpoint, gambling involves an agreement between two or more parties to exchange money based on future uncertain events.

        In a looser sense, shorts are gambling that the stock will fall, and regular buy-and-hold is gambling that it will rise. However, both of these are really pseudobets where one of the “parties” to the bet is an abstract market entity.

        The real disagreement is whether the distinction (between actual definite parties and the abstract market “party”) is material. I don’t think that it is; the discrete agency of the opposite party isn’t important if it will act to close the wager regardless. If you do think that the difference is important, separating insurance from gambling is even more challenging.

        Also, yes, in an even looser sense, buying egg-laying chickens is gambling; the market “party” to the wager agrees to pay you if the chickens turn out to produce eggs. The physical existence and required forfeiture of the eggs are more substantial differences from a traditional wager, though, at least in my opinion.

        Thumb up 4 Thumb down 0
      • RJ Roy says:

        I also agree that I don’t think the distinction is material. Isn’t gambling services like Proline technically the same as something like Intrade or the markets, in the sense that you are making the “bet” with a neutral and/or abstract third party?

        Thumb up 2 Thumb down 0
      • James says:

        If buying egg-laying chickens is gambling, then every economic activity is gambling, because there is always some uncertainty: a fox may raid the henhouse, I may trip on the way to market and break my basket of eggs, etc… But the difference is that, barring unlucky chance, I expect my profit to come from my labor and/or investment. Gambling involves no labor or investment: the value exchanged is determined strictly by chance.

        Same applies to the stock market. Sure, if I was a day trader wagering on making the right calls on short-term price variations, I’d be close to pure gambling – or perhaps closer to poker? But when I invest based on dividends & growth prospects, I expect profit to come from the work done by my already-earned dollars, not from chance.

        Thumb up 1 Thumb down 1
      • Seminymous Coward says:

        It’s my understanding that Intrade actually matches people’s bets in such a way that each share represents a single $10 bet between specific individuals, even if they may not know each other’s names.

        Yes, the chickens and eggs have more substantial differences from gambling, as I conceded. Perhaps they have served their full purpose as analogies, as I think they can be distinguished from traditional gambling and market investments in important ways. The comment about every economic activity being gambling under even a slightly relaxed definition certainly rings true to me, though. Some conceptual frameworks apply quite broadly, e.g. games.

        “I expect profit to come from the work done by my already-earned dollars” confuses me. The company does not in fact get the dollars, and they certainly do no labor. Your returns are determined by something your money does not actually affect (in any meaningful way). There’s never certainty that a stock will rise, no matter how much you might like it. Hence the outcome depends on future uncertain events.

        Thumb up 2 Thumb down 0
      • The Dude says:

        James, sounds like you’re stuck on this high horse thinking that the stock market is the only game around which is based on skill. New York just ruled that poker is a game of skill… and read this story and try to tell me that the author didn’t use a little hard work and considerable effort making thousands off intrade predictions:

        Thumb up 4 Thumb down 0
  7. Mike B says:

    Hidden due to low comment rating. Click here to see.

    Disliked! Like or Dislike: Thumb up 5 Thumb down 18
  8. Caleb B says:

    Use your head people. It doesn’t matter that InTrade was an “unregulated derivatives” market. It matters that the gov’t can’t tax the gains. THAT is why they’re going after InTrade.

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 0