For John, BLUF: The Bureaucrats in Washington have stifled another internet innovation—trading "futures" on future political events. Nothing to see here; just move along.
Reporter John Stossel, at Fox, posted a story about the Ireland based political issues on-line futures trading firm kicking out its US customers. The title was "Government Crushes Innovative Online Prediction Market". Well put. Crushes.
Today, Americans were told that they must close their Intrade.com accounts. That happened because the federal government agency known as the "Commodity Futures Trading Commission" (CFTC) today sued the prediction market, where people from all over the world bet about things like who will win elections.Quoting someone else, "from a national security perspective (OSINT) this could have been a great resource for analysts, but the government, for some reason, shuts it down."
Intrade decided all its U.S. customers must now close their accounts and withdraw their money from the site.
Well, it is the Federal Government, and it includes the Dodd-Frank Act:
"Section 4c(b) and 9(a)(3) of the [Commodity Exchange] Act, §§6c(b) and 13(a)(3) (2006); Section 2(e) of the Act, as amended by the Dodd-Frank Act, to be codified at 7 U.S.C. § 2(e); and Regulation 32, as amended, to be codified at 17 C.F.R. § 32 (2011);"Nate Silver wasn't the only one to predict an Obama victory. When Analyst Karl Rove was predicting a Romney win, InTrade said it would be Obama.
In English: the government says that many of the things Intrade allows people to predict - everything from what the price of gold will be in the future to whether the U.S. will go to war soon - are legally considered "commodity options," and that Intrade broke the law because it isn't licensed to trade those. The penalty is $140,000 per violation.
Quoting another anonymous source:
This is not the first time that a prediction market has been "crushed" by the USG. Some may recall the Policy Analysis Market, an initiative of the DARPA Information Awareness office back in the 2002-2003 time frame. It resulted in the resignation of John Poindexter. You can read more about it here, or here.I hope Senator Chris Dodd and Rep Barney Frank are happy to have unleashed the petty bureaucrats to crush an innovative and informative service. It will soldier on, but without any "trades" from the US.
Regards — Cliff