Guest Post: Anti-Business US Government Puts a Stop to Intrade Making US Customers Happy
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Reports have been swirling around about the death of another business at the hands of a US government agency. While those reports weren’t totally true, as usual, the US Government has squashed any attempt by unfree US citizens to do what they want. Intrade is still alive and kicking (although it probably wouldn’t be if it was based in the US), minus its US customers…for now anyway. As of December 23, 2012, all US accounts with Intrade will be suspended thanks to the meddling of the US Commodity Futures Trading Commission (CFTC).
While Intrade itself isn’t dead, its founder is. Irish businessman John Delaney founded Intrade in 2001. He died at age 42 last year in an attempt to realize his lifelong goal of climbing Mount Everest. He was just 50 meters from the peak and since his body was unable to be recovered, he’s still there. (I wonder if there was a bet on whether or not he’d make it.) Delaney was born in 1969 near Dublin where Intrade would later be based. He got his MBA in finance from the University College Dublin and after a career in investment banking he got into online gambling in 1999.
For those of you who are unfamiliar with Intrade: this company simply allows anyone to bet on yes-or-no events in the real world. You can literally bet on anything with a yes-or-no outcome. Examples listed right now on the site’s “How It Works” section are:
· The Dow Jones to close on or above 13,000 on 30 Dec 2012
· Barack Obama to be reelected president in 2012
· The United States or Israel to bomb Iran before the end of 2012
(Note the second example. That’s a little dated. They should have replaced it with “CFTC to forbid US customers from using our website.”… I would’ve put hard earned money on that one… easy call!)
It’s actually very simple and serves a very basic desire among humanity to try to predict events…and make a little money by being right. What’s more, since there’s money on the line, the players tend to have the best information available to make the best possible guesses.
Is it accurate? That is to say, do the majority of bettors on Intrade tend to be right about the outcomes on which they’re betting? Amazingly so, as you’d expect the case to be in a semi-free market when money is on the line. Having something to lose tends to sharpen performance (the reason entrepreneurs and businesspeople will always make better decisions than politicians). In 2011, professional pundit Rachel Weiner admitted, “The site’s collective wisdom tends to be more reliable than the cadre of professional pundits when it comes to forecasting election results.” She continues, “In 2008, bettors got only two states wrong – Indiana and Missouri…In 2004 [however] the site got every state right.”
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