So the government--the Commodity Futures Trading Commission--threw a tantrum that led to Intrade shutting down earlier this year. The same Intrade that had predicted Barack Obama's Electoral College total within a single vote;
Trading volume in 2012 was high, with eager speculators making more than a million transactions involving 23.8 million shares. (Buying a share is essentially making a bet that a certain event will occur.) In addition to political prediction markets, Intrade offered contracts on everything from Oscar nominations to the price of gold to the birth dates of celebrity babies.
But just 20 days after Intrade's electoral triumph, the federal government launched proceedings that would eventually shut the site down. On November 26, the U.S. Commodity Futures Trading Commission (CFTC) filed suit in a Washington, D.C., district court against the Ireland-based firm, alleging that Intrade had violated a ban on unregulated options trading.
"It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called 'prediction' contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt," David Meister, director of the commission's enforcement division, wrote in a statement heavy on both legalese and sneer quotes. The statement specifically mentioned Intrade markets pertaining to the price of gold and currencies-turf that traditional commodities markets usually occupy.
While the government cited no evidence of harm, it claimed that the rules Intrade broke "enable the CFTC to police market activity and protect market integrity." The CFTC said it would seek "civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law."If ignorance is bliss, the government is here to enforce it.
Thanks to Craig Newmark (who could at least have warned us about socialist economists coming out of his University).
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