Finance Roundtable

Apropos of Andrew Gelman's comments on the questionable benefits of betting markets, if insurance can be understood as reducing variance in wealth, consider the effect of diversification at the portfolio level. Uncorrelated assets such as those attached to political events, weather, sports or even poker hands ...

The National Association for Business Economics' experimental auction data for the October payrolls release seems to be unavailable, but let's compare their forecasts to CME's economic derivatives auction for the September release.

NABE:

Let's reorient ourselves towards the regulatory environment that potentially affects the evolution of prediction markets.

First, is the Chicago Mercantile Exchange's planned Credit Event Future within the jurisdiction of the CFTC? The Chicago Board Options Exchange protests that it is not. CME's initial

Tom Bell argues that the CFTC does not have authority over event and prediction markets. At the core of his argument ...

The New York Mercantile Exchange today announced that it intends to list Property Damage Risk contracts based on Gallagher Re's planned "Re-Ex Index", which will track losses due to catastrophes, defined as events causing more than $25 million in damages by ISO's Property Claims Services®.

Leslie Fine's announcement that HP had signed with Pfizer to deploy an "information gathering tool" could mark a turn for corporate prediction market consultants, regardless of nomenclature. Pfizer had enough internal resources to build their own prediction markets, and ran them for about a year. As Leslie tells ...

There is some excitement around Yahoo's planned "Yootles" currency and group decision-making mechanism. Near the end of the above paper, one sees that the initial interest rate for Yootles will be set ...

In the wake of the Neteller arrests this week, alternate currencies are unfortunately a bit less interesting. While the DOJ has not yet moved against gambling in virtual worlds such as Second Life, it is only a matter of time now. When the UIGEA ...

This month continues to see consensus build that "prediction markets" ought to be regulated by the Commodity Futures Trading Commission. It is quite possible that the CFTC will approve CME's Credit Event Futures on Wednesday, signaling the legal way ahead for other "event futures" in the US.

As more prediction market enthusiasts in the U.S. reconcile themselves with eventual CFTC regulation, the Poker Players Alliance is making a bid to join the ranks of the privileged exemptions to UIGEA. Prediction markets have simply not been profitable enough to support a national lobby ...