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Intrade

Arkady

Arkady

President
Intrade, the market where you could place bets on things like who would win the presidential election, has gone belly-up:

http://blogs.wsj.com/marketbeat/2013/04/06/intrade-faces-700000-cash-shortfall-possible-liquidation/

It sounds like Intrade is suggesting two parties failed to honor their bets, throwing the market into a cash shortage of nearly a million dollars, forcing liquidation, but it won't elaborate on it.

It'll be interesting to see what comes of it. In the meantime, it makes me very wary about putting any money into these unregulated markets. It's too bad, because they could have a real role to play in letting people mitigate risk in non-traditional ways. For example, if you're in an economic position that will do well in one political scenario (e.g., being a worker at a renewable energy company that's likely to do well if the Democrats take Congress), being able to place the counter-bet, to hedge your risk, would be valuable (e.g., placing a bet that the Republicans will take Congress, so that if they do, hurting your job security, you have the win from that bet to help tide you over if you lose your job).
 
The only reason the guy at the renewable energy company would lose his job is that there is no money in it. If your product doesn't make a profit...and you're counting on it to live...you're an idiot.
 
I remember in 2007 a poster told me to go over there and put my money on McCain winning the GOP nom, and I did not, and had I well I could pay for me Obamacare...
 
Trading on Intrade in the US was halted a while ago over a dispute about gold contracts. I quit trading when the founder died in an accident. I wish there were a better market to play in on those kinds of questions. I slayed the IARPA futures market. That was a lot of fun. Ended up ranked 47th.
 
For anyone interested, this from 'The Economist':

INTRADE, a Dublin-based “prediction market” where punters could bet on the probability of events such as elections or awards, had a strong claim to be the favourite website of economists. While seeking to outsmart each other, its clients collectively generated free forecasts of the future used by many academics, businesses and journalists. When America’s Commodity Futures Trading Commission (CFTC) sued Intrade in November for offering illegal contracts on the price of goods regulated by the agency, critics complained that the decision would strip the economy of a highly valuable source of information.

The regulators now appear to have been vindicated. Last month the site abruptly shut down, offering only “financial irregularities” by way of explanation. On April 5th Ronald Bernstein, an Intrade director, announced that it needed $700,000 immediately to avoid liquidation. It turned out that the firm had followed in the footsteps of MF Global, a derivatives broker, and Worldspreads, a spread-betting outfit, which both collapsed in 2012 after committing the cardinal sin of dipping into their clients’ accounts. In particular, an audit revealed that in 2010-11 Intrade had made suspicious payments of $2.6m to its founder, John Delaney, who died nearly two years ago while climbing Mount Everest.


Complete text: http://www.economist.com/news/finan...rediction-market-faces-insolvency-bet-lynched


Intrade posted this on its website:


To Our Customers:

May 6, 2013

We have begun processing withdrawals for the account holders who agreed to forbearance. On Wednesday, May 8th, we will begin processing withdrawals for all non-US accounts. On Wednesday you will be able to log into your account and request a withdrawal on the My Intrade page of the website. Please note that at this time we are processing withdrawals by bank wire only - we are not processing check withdrawals.

On Monday, May 20th, we will resume processing withdrawals from US accounts. Full details on how US customers can withdraw their funds will be published on the Intrade homepage closer to the time.

These dates have been set based on the expected number of withdrawals and the resources available to process these requests. Depending on the number of withdrawal requests received, Intrade reserves the right to extend these dates if required. Please keep an eye on the Intrade homepage for further updates.


http://www.intrade.com/v4/home/



Not the kind of place I'd put my money in.....
 
Market?

It was a gambling site. An electronic bookie. Calling Intrade an "unregulated market" is like calling a hooker a "sex therapist".
 
whoa - online gamblers who don't honor their bets when they lose? what is the world coming to?

moronic business models and vacuous assumptions about to make money by online entrepreneurs, evidently.
 
InTrade was consistantly right on the November election odds...but not crying that they're gone.

For a good predictive analysis....I'll stick with Nate Silver. He nailed it...while the poor gullible Fox-heads were being told of "skewed polls" and "Romney landslides". :smile:
 
Corruptbuddha said:
The only reason the guy at the renewable energy company would lose his job is that there is no money in it. If your product doesn't make a profit...and you're counting on it to live...you're an idiot.
Click to expand...

Whether the product makes a profit depends largely on the government context. If regulations cause various energy sources to internalize their costs, for example, renewable energy is better able to profit than if dirtier energy sources are allowed to externalize their costs. Similarly, if we go to war regularly to keep oil prices low, that also makes it harder to profit from renewable energy.
 
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