Intrade anger

Posted on 2013-04-06 by Gilbert

[Content warning: Swearing. Lots  of it.]

[Update: I got my principle back, minus a few Dollars for fees and a few Euros because the Dollar got stronger.]

So during the sedisvacancy I put $500 into Intrade, betting most of it on the conclave’s outcome. Yep, that’s totally legal canonically, though I’m not quite sure about Germanically. If they hadn’t canceled all positions a few days before the conclave, I would have won, by my calculation, $82.41. Now it looks like even my original investment is in danger.

No need to worry about my wellbeing, I can afford the loss, or I wouldn’t have been gambling with that money in the first place. This isn’t my lunch, it’s my Nexus 10. Still, I am really fucking pissed off and need to vent a little.

Random points of random:

  • Conspiracy theory: When the American authorities shut Americans out of Intrade for flimsy reasons a few months ago, did they know something?
  • Alternative speculation: Or otherwise, did the exodus of American customers break the camels back?
  • Incredulous swearing: How the fuck do you need external auditors to tell you the balance on your bank accounts is $700000 less than in your computer system? This ain’t rocket surgery.
  • Policy proposal: The directors of a financial service company  should have to pledge their personal property on its survival. Not because there would be much to collect but to align incentives.
  • Insight: Perhaps illiquid markets are illiquid for reasons.
  • Dire prediction: For the foreseeable future, this is the end of prediction markets. Governments don’t like them, so there will be no properly regulated versions. The main prediction market advocates are libertarians anyway, so basically nobody wants prediction markets regulated to the the degree that is objectively necessary for them to work. And the free market is plainly unable to do it. Sorry GMU econ department, come back in 50 years.
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2 Responses to Intrade anger

  1. Martha says:
    2013-04-06 at 21:38

    If you wanted to have a punt on the papal conclave, why didn’t you stick with a bookie?  Okay, maybe America doesn’t permit online betting (I know nothing about it) but far as I’m concerned, stock markets are gambling and if I’m going to gamble, I’ll stick with the fellas shouting the odds on the racecourses.

    Sorry to hear you got stung, but in future why not just buy a lottery ticket if you want to waste money?

    No, that’s harsh.  But according to the Irish satirical magazine, “The Phoenix”, which did a bit about the woes of Intrade in its issue of 11th January this year because the late John Delaney, its founder, was Irish:

    “Intrade filed accounts which raise questions over payments made into bank accounts controlled by the founder of the firm, John Delaney…According to the 2010 accounts for Intrade…over $1.2 million was transferred into accounts controlled by Delaney. The nature of these payments is unclear because of insufficient documentation, the accounts state….A note from the Intrade accounts also states that the current directors are aware of issues identified related to ‘significant financial inaccuracies’ in the company’s internal accounts for previous years”

    So it looks as though, for at least three years, the accounts were in a dodgy state – sufficient reason for the U.S. government to take action, I would have thought?  And another reason why I don’t think prediction markets are this shiny new improved instrument of policy-making which will be impervious to the bad old manipulations of the stock market because goodness, why would anyone want to cook the books to make more dough?

    • Gilbert says:
      2013-04-07 at 00:46

      OK, several points here:

      • Stock markets are a different animal entirely, but I actually agree prediction markets are just fancy gambling.
      • That is not a moral problem as long as  the stake comes from my luxury fund. As the World catechism explains:

        2413 Games of chance (card games, etc.) or wagers are not in themselves contrary to justice. They become morally unacceptable when they deprive someone of what is necessary to provide for his needs and those of others. The passion for gambling risks becoming an enslavement. Unfair wagers and cheating at games constitute grave matter, unless the damage inflicted is so slight that the one who suffers it cannot reasonably consider it significant.

      • I still get to be angry, because there is still a difference between the wrong horse winning and bookie turning out to be less respectable than I thought them.
      • The reason I went with a prediction market rather than a regular bookie is because fancy gambling is still fancy. For example, if quotas change before the event, bets can be closed out at the then-current quota. Also bets can be pre-registered in case the quota crosses some pre-set limit.
      • A Euro won at betting on not totally random events is much better than a Euro won at the lottery, because it comes with additional special bragging rights. Unless the bookie goes belly up of course.
      • Of course Sturgeon’s law also applies to the hype over prediction markets. But they wouldn’t have to work better than stock markets to be useful, it would be enough if they worked about as badly. That should be possible if they were regulated about as badly, rather than the status quo of being illegal in some countries and basically unregulated in others. Then people would still throw out wrong predictions because deceiving people is worth the money, but they wouldn’t throw out wrong predictions because “Who cares, it’s not like I have money on the line.” So we would base average predictions on the average of people willing to put up or shut up rather than the average of people screaming loudest. But then that kind of regulation won’t happen in the next few decades or so, and the idea of the free market doing it pretty much dies with Intrade.

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