Gambling on the Future

Friday, December 07, 2012

Transcript

gambling, poker, chinatown (Stephen Nessen/WNYC)

Last week the popular prediction market Intrade announced it would shut its doors to Americans after being sued by US regulators. US regulators have accused InTrade of violating the ban on off-exchange options trading - in other words, gambling. But others argue that sites like InTrade can be better predictors than pundits or polls. The New York Times’ Washington Bureau Chief David Leonhardt makes the case for prediction markets to Bob.

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Guests:

David Leonhardt

Hosted by:

Bob Garfield

Comments [3]

Kewen Ma from China

A very important aspect was left out of the discussion here.

Why is gambling on futures potentially dangerous?

It's because when people gamble on future events they have an incentive to interfere with the unfolding of events. Sure, nobody can interfere with the arrival of a hurricane, but if what's at stake is Ohio's vote, and you have a sum of money on the line, you might be tempted to do something to up your chances. (And let's no say one person can't make an impact. World War 1 was started, arguably, by the act of one man.) In fact, it doesn't matter how common this scenario would be. The key is that the incentive is for people to intervene in world events that much more significant than a sports match or a table of cards would be.

That is why gambling on futures is frowned upon, not because of some moralistic uptightness. Gambling in casinos and on sports has a much smaller potential impact on the function of society. (Regardless, there's only so much you can do now in a casino to interfere with the process of the game, anyway.)

I wish this had been raised in the discussion--otherwise, this key issue will be lost in the echo chamber.

Dec. 10 2012 09:24 AM

Actually, no. Gambling was not the issue.

Intrade was shut down for running a US futures market without being licensed as a US exchange. The gambling goes on in our licensed exchanges anyway.

Intrade was not busted for not registering with the various state gaming commissions, it was for not registering with the SEC.

Dec. 09 2012 03:31 PM
David Gillman from Arlington MA

Oh, Bob Garfield, I'm waiting for the other shoe to drop! You asked David Leonhardt to predict the future of prediction markets but you never asked what the prediction markets say!

Faithful listener,

David Gillman

Dec. 08 2012 01:55 PM

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