But it’s not gambling! It’s a “prediction contest.” Read more »

Today in when prediction-markets-are-outlawed-only-outlaws-will-run-prediction-markets news, the SEC and CFTC have sued Banc de Binary, a prediction market that sounds like it’s no Intrade:

Banc de Binary solicited customers in the United States. … It broadly advertised its websites to individuals in the United States through YouTube videos, spam emails, and other internet-based advertising.

Also it’s a “Cypriot and Israeli company … based in the Republic of Cyprus and regulated by the Cyprus Securities and Exchange Commission (‘CySEC’),” so even if they are keeping your money in an escrow account at a bank it’s still not safe, ZING.

I dunno, is Banc de Binary a scam? I like the name: you say “prediction market,” they say “binary option,” someone says “online betting,” but they all mean roughly the same thing. And the website has I think median levels of eye-bleeding scrolling overpromising hyperbolic red-and-green flashing misery for an online trading site. “Spam emails” sounds bad but for the rest BdB advertises 24/7 live customer support and the SEC backs them up, saying as though it’s a bad thing “Banc de Binary also solicited potential investors in the United States by sending them emails, calling them on the telephone, and chatting with them via instant messenger over the Internet.”

Also the SEC’s (and CFTC’s) allegations about the harms of BdB are pretty meh. E.g.: Read more »

Should you have anything left in your InTrade account after letting it ride on Mitt Romney, disbelief in the Higgs boson and Zero Dark Thirty, you have nothing to fear: You’ll get all your money back after the former betting site successfully pursues “two substantial monetary claims against two distinct parties for an aggregate amount greater than $3,500,000.” Or not. Read more »

Like a lot of people I got an email yesterday telling me to close my Intrade account. This will not be a problem for me because:

Now I know it looks like I was terrible at predicting the election, but the real explanation is of course that I was astutely predicting the end of Intrade and managing my account to a level appropriate for that outcome. Though I assume there’ll be a $20 bank transfer fee to get those twenty cents out.

This CFTC suit is weird, huh? It’s effectively shut down Intrade for allowing US citizens to make illegal options trades, but its theory is a bit murky. One obvious thing about Intrade is that it is a little illegal to bet on U.S. elections and Oscar winners and all the other things you can bet on on Intrade, because it is a little illegal to bet on anything. This is America; you’re just not supposed to bet on things.

Except the things that the CFTC is willing to let you bet on.1 That’s a weird grab bag; you can bet on gold and orange juice and pork bellies and interest rates but not … well, not onions, but more relevantly, not elections. The CFTC is not a fan of election betting; earlier this year they rejected a request to allow trading of political event contracts on a derivatives exchange. And of course Intrade is for betting on elections, so of course the CFTC wants to shut them down.

Except that the CFTC isn’t suing Intrade for letting you bet on elections; it’s suing Intrade for letting you bet on the things that the CFTC lets you bet on. Go read the CFTC complaint; it doesn’t mention elections. The CFTC’s problems are with “binary options betting on the future prices of gold and crude oil, and changes in the U.S. unemployment rate and U.S. gross domestic product figures.” Which are just fine for betting on. Just not, it seems, on Intrade. Read more »