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 »