On Monday the U.S. Commodity Futures Trading Commission (CFTC) sued offshore prediction market operator Intrade, prompting it to close its doors to U.S. customers. This will likely kill Intrade in its current form. Non-U.S. customers appear sufficient to support contracts only on major political events, at least based on the modest offerings at Betfair (an exchange that does not accept Americans) and offshore bookmakers. We will likely lose real-money prediction markets on the wider range of subjects that Intrade offered (“Will the U.S. go to war with Iraq?”; “Will we find WMD in Iraq?”; “Will the deficit decline if Obama is elected?”). We will also lose a good platform for the development of new, even more interesting contracts.
The Great Debate
from Rolfe Winkler:
Gary Gensler -- regulator and, yes, Goldman alum -- has distinguished himself in Washington. As CFTC Chairman, he's fought to impose stricter rules on OTC derivatives and recently proposed rules that would cut the leverage currency traders are allowed to deploy from 100:1 to 10:1. Lest we all forget how dangerous leverage can be when traders misuse it, there's LTCM to serve as exhibit A. In a clear sign that Gensler is fighting the good fight, traders are screaming about the proposed rule. Fantastic.
Like Archbishop Thomas Cranmer before he was burned at the stake for heresy, the U.S. Commodity Futures Trading Commission (CFTC) seems about to make a dramatic recantation.