Thursday Night College Sept. 21

Virginia @ Georgia Tech

Virginia: 6-16 ATS away off an Under
Georgia Tech: 6-0 Under off an Over

It sounds like Georgia Tech should dominate Virginia right? WRONG! The Georgia Tech seniors, including QB Reggie Ball, have never defeated Virginia and although I have little doubt that they should walk away from this contest with their first win in 3 years over this Virginia team, I can also confidently say that NO WAY will they win by this spread margin. Georgia Tech usually has an open date the Saturday before a Thursday night game, But that is not the case in this one after they battled Trpy last Saturday. The lack of additional preparation will make this contest difficult for the Yellow Jacket coaching staff to get ready for Virginia, or to ready their bland offense to do anything different then they did last week.The great thing is, Reggie's been looking at it for three years and has a much better understanding of it. But Gailey fails to recognize that Reggie Ball is still Reggie Ball something he cannot escape. In essence, he is, and will always be, a quarterback with bad accuracy and poor decision-making abilities.

JEDIMINDTRICKS RECORD
ALL NFL GAMES: 7-8
WEEKLY PICK 6: 3-3
PICK OF THE DAY/WEEK: 2-1

JEDIMINDTRICKS PICK OF THE DAY: Viginia +17.5 Can't wait to see Virginia to put up a good fight. If Georgia Tech goes under (according to the trend above) Georgia Tech will have a hard time covering this spread.

Micro liberty in the chat pit today

This is a conversation I had with my good friend Napito (edited):

Napito: I recieved a letter from ts help yesterday

Napito: saying that we should regulate each other on the pit

...

caveatBettor: i also believe in self-regulation. while anyone here can choose to report anyone else here, it takes the matter out of our hands for a 3rd party to decide

caveatBettor: why would anyone who advocates for free markets do things that way?

caveatBettor: i think its because they want to enjoy big govt as well as free markets, not understanding the tension betwewen the two

James Surowiecke in the New Yorker magazine says:

Furthermore, the ban on online betting is hindering the development of new markets that could predict far more important outcomes than that of the N.B.A. finals. In the past few years, a host of prediction markets, as they’re usually called, have appeared online, offering people the chance to speculate on subjects ranging from the box-office performance of Hollywood films to the outcome of Presidential elections and the spread of bird flu. These markets’ forecasts have proved remarkably accurate—just as bettors collectively do an exceptionally good job of predicting sports results. (In 2004, for instance, Tradesports, a Dublin-based prediction market, called thirty-three out of thirty-four races in the Senate correctly, and called all fifty states correctly in the results for the electoral college.) But in the U.S. these markets have to use play money, because using real money would constitute gambling. The online gambling ban prevents these markets from getting bigger and more accurate.

That might seem an acceptable cost if the war on Internet betting looked set to accomplish its goals. Instead, it’s likely to make the problems it was designed to solve worse. Online bookmakers have been portrayed as shady operators, but the biggest of them are far more transparent and easy to regulate than illegal bookies, many of whom have ties to organized crime. David Carruthers, before he was arrested, had been actively calling for the regulation of his industry. Congress may think that driving bettors back underground can curb underage gambling and money laundering, but don’t bet on it.

Read the whole thing (hat tip to Don Luskin).

I have made similar arguments here about the law. And here is a good WSJ article on current enforcement.

I've also quoted some smart dudes who agree. And I have talked about the benefits of predictive information markets.

NFL Week 3 Analysis - Pick 6

The games (below) are the only games i'll be keeping track of. Please Come back for my Monday night pick posted on Monday afternoon.

*Cincinnatti @ Pittsburgh - Jedi Pick: OVER 41.5
Cincinnati: 9-1 ATS away off a straight up win
Pittsburgh: 8-0 Over as a home favorite
JEDI THOUGHTS: This is a tought one too, but I love how Cincinnatti is playing, and they are my pick for the Super Bowl, so I'm taking Cincinnatti, and plus it's only -2.5 again. But be careful Pittsburgh is bound to bounce back soon. Just play the OVER, it's more safe.

*Jacksonville @ Indianapolis - Jedi Pick: Indianapolis -6.5
Jacksonville: 12-4 Under in dome stadiums
Indianapolis: 14-5 ATS off BB ATS wins as favorites
JEDI THOUGHTS: Jacksonville didn't look that good, they were struggling to score against Pittsburgh, and Pitt wasn't even playing a good defensive game. Even if the Jags can play good defense this week, look for Peyton Manning to kill e'm in the air.

*Tennessee @ Miami - Jedi Pick: Tennessee +10.5
Tennessee: 12-2 Over off BB losses
Miami: 1-7 ATS as a home favorite
JEDI THOUGHTS: What is going on with Miami? first I thought that they were an OK team because they played an OK game against Pittsburgh, then I figured they can't even beat Buffalo, after I called them a FLUKE? I think Miami is the fluke here. Watch Miami as they continue to struggle EVEN AT HOME.

*Chicago @ Minnesota - Jedi Pick: Chicago - 3.5
Chicago: 8-1 Under away off a home game
Minnesota: 18-6 ATS as a home underdog
JEDI THOUGHTS: Hah, Minnesota 2-0, Well better be ready for this tought, and I mean TOUGH defensive team, Minnesota won't stand a chance with these Bears. Minnesota wins both games by game winning field goal? Hah, they shouldn't of won against Carolina if it wasn't for that lateral mistake. I'd like to see Minnesota score more than 14points this game. Good Luck Minnesota in trying to come up with a win against these Bears.

*Baltimore @ Cleveland - Jedi Pick: Cleveland +6.5
Baltimore: 10-2 Under away vs. conference opponents
Cleveland: 13-5 Under in home games
JEDI THOUGHTS: Baltimore not so impressive especially when playing those Raiders, well don't get me wrong their defense is not that bad. But remember Cleveland is still also hungry for their first win and they did have a tought game against Cincinnatti last week. Look for Cleveland to beat them in the air. Ray Lewis and Baltimore will stop Cleveland's ground game. But also look for this game to be under, if Cleveland can't move the ball through the air.

*Philadelphia @ San Francisco - Jedi Pick: San Francisco +6.5
Philadelphia: 11-3 Under off an Over
San Francisco: 22-10 ATS after allowing 400+ total yards
JEDI THOUGHTS: WOW! San Francisco impressed me last week, great game. This is the only game I like as an upset. Alex Smith is finally found some kind of rhythm, it took him a little more than a year to find it, so I doubt he'll just blow it in this game, plus they're at home. While Philadelphia is still trying to recooperate after that BIG loss last week. (IT DOESN'T GET ANY BETTER THAN THIS.)

JEDIMINDTRICKS RECORD
ALL NFL GAMES: 7-8
WEEKLY PICK 6: 3-3
PICK OF THE DAY/WEEK: 2-1

Here's how Tradesports traders can protect our common interests

We form a union. We lock in politicians and vendors (i.e. TS) and get lots of fat concessions and special treatment.

Where did I get this great idea? From today's WSJ op-ed (subscription required):

Hard-working union members deserve to know, for example, that of the AFL-CIO's $82 million in discretionary disbursements from July 2004 to June 2005, only 36% went to representing members in labor negotiations -- which is what unions were created to do. A whopping $49 million, or 60% of its budget, instead went to political activities and lobbying, while another $2.4 million went to contributions, gifts and grants. The National Education Association was even more skewed toward politics, spending only 33% of its $143 million discretionary budget on improving its members' lots.

By our calculations based on the filings, the AFL-CIO spent at least $2.7 million alone on T-shirts, flyers, telephone calls, Web site hosting, and other support for 2004 Presidential candidate John Kerry. Groups that received AFL-CIO money included Citizens for Tax Justice, an organization devoted to higher tax rates; the Economic Policy Institute, a think-tank that campaigns against Social Security privatization and tax cuts; and the Alliance for Justice, a ferocious opponent of President Bush's Supreme Court nominees.

Dues-paying workers of the world might want to ask: Why is Mr. Sweeney spending more of their money trying to raise taxes, or fighting for the cultural left, than he is on collective bargaining?

The IRS may also want to inspect these forms. That's because, prior to the new LM-2 disclosure rules, at least a dozen large unions had told the tax agency that they spent nothing on politics. The National Education Association's 2004 tax return, for instance, left blank the line for "direct or indirect political expenditures." Yet according to its LM-2, the NEA spent $25 million on such activities from September 2004 to August 2005. Eliot Spitzer could sure have fun with that one -- if he didn't have the NEA's endorsement.

The forms also offer a glimpse at union chief salaries. At least three union heads took home more than a million dollars in compensation in their last fiscal year -- though two were admittedly the heads of the NFL and NBA players unions. The third-fattest union cat was Martin Maddaloni, the chief of the Plumbers and Pipefitters, who took home $1.3 million last year. The Plumbers' "director of training" -- a fellow named George Bliss -- somehow managed to make $456,644 in 2005. Now we know why plumbers are so expensive: They have to make enough to pay the dues that keep their union reps in Armani.

The LM-2 forms show that some 1,015 paid union officers and employees devoted more than 90% of their time to political activities. Combined, these folks took home compensation worth nearly $53 million. Some 1,755 union personnel spent at least 50% of their time on political activities and lobbying.

As for financial management, let's just say some of these union chiefs are having fun in their jobs. United Auto Workers Local 14 reported it spent $67,000 at an amusement park. The International Brotherhood of Electrical Workers spent $124,000 at a hotel resort. And the Plumbers forked over $225,000 on Nascar advertising.

A couple of other fun facts: Of the 100 highest paid union executives, 93% are men. We hope some class-action lawyer isn't looking to sue for gender discrimination. And, believe it or not, unions report that they spent $624,000 at largely non-unionized big box retailers across the country, including Target, Wal-Mart, Sam's Club, Costco and K-Mart. They apparently know a low price when they see one.

Monday Night NFL Sept. 18

Out of the gate with a 1-0 start to their season the Jacksonville Jaguars will look to go to 2-0 as they host the Pittsburgh Steelers Monday night. The Jags know they'll be in a division dogfight all year with the Indianapolis Colts who are in first place in the AFC South by virtue of their starting the year 2-0. And, wouldn't you know it, the Jaguars go to Indianapolis next week and certainly won't want to go into that contest off a loss.

JACKSONVILLE is 8-1 against the spread versus PITTSBURGH since 1992
JACKSONVILLE is 6-3 straight up against PITTSBURGH since 1992
6 of 9 games in this series have gone UNDER THE TOTAL since 1992

Pittsburgh: 8-1 Under away off an Over
Jacksonville: 7-0 ATS in September

JEDIMINDTRICS PICK OF THE DAY: Jacksonville +2.5
I CAN'T SAY THIS ANYMORE, BUT THIS IS ANOTHER WILL WIN PICK OF THE DAY BY ME AND A STONE COLD LOCKer AT KNBR 1050 WHO'S IS NOW 3-0

JEDIMINDTRICKS RECORD
ALL NFL GAMES: 7-8
WEEKLY PICK 6: 3-3
PICK OF THE DAY/WEEK: 1-1

Dow should open above 11600 this morning

and may touch 11700 before the close.

CPI data is easing nicely. Hysterical bears who still have a little margin left in their accounts speak of CPI understating inflation, and therefore useless and a government conspiracy beyond Oliver Stonian proportions.

I begged, begged, begged you bears to tread carefully. Hopefully you listened, and are wealthier for it.

I believe that the best range of consumer inflation is 2-3%, and GDP growth 3-5%. We are awfully close to that now, there is very little volatility in the data, and never in history has it been this good.

NFL Week 2 Analysis

We're now in week two of the NFL. It was a pretty damn tough week one, and i'm pretty sure week two will be twice as hard. But here's my picks and analysis for the week. Check out my blog for all Sunday's game analysis. The games (below) are the only games i'll be keeping track of. Please Come back for my Monday night pick posted on Monday afternoon.

*Carolina @ Minnesota - Jedi Pick: Carolina - 2.5
Carolina: 7-0 ATS away off a loss as a favorite
Minnesota: 8-1 Under at home off an ATS win
JEDI THOUGHTS: Carolina - 2.5? Are you kidding me? Hah. Carolina will win, they have to find their game fast, before it's too late.
*Giants @ Philadelphia - Jedi Pick: Giants +3.5
NY Giants: 17-7 ATS after gaining 400+ total yards
Philadelphia: 16-6 Under as a favorite
JEDI THOUGHTS: Giants played a good game last week, just that Eli was a little tense, plus big brother is just too much for him. Also remember Philidelphia was only playing Houston Texans! Watch Giants come back with a major win.

*TampaBay @ Atlanta - Jedi Pick: TampaBay +5.5

Tampa Bay: 24-4 Under first two weeks of the season

Atlanta: 0-7 ATS off a win by 14+ points

JEDI THOUGHTS: Gruden won't let his team fall 0-2. TampaBay will come back with a fight.

*New Orleans @ GreenBay - Jedi Pick: New Orleans -1.5

New Orleans: 2-9 ATS vs. conference opponents

Green Bay: 30-14 Over after scoring 14 points or less

JEDI THOUGHTS: Seems like Saints found a little something something, and still don't think GreenBay has anything even at home.

*New England @ NY Jets - Jedi Pick: New England - 6.5

New England: 6-1 Over off a win by 6 points or less

NY Jets: 6-17 ATS at home in September

JEDI THOUGHTS: Jets win two in a row? Yea, maybe against Texans. Jets will fall apart after they see this New England team.

*Washington @ Dallas - Jedi Pick : Washington +5.5

Washington: 14-2 Under off an ATS loss

Dallas: 10-4 ATS at home vs. Washington

JEDI THOUGHTS: Both coming off a loss, and looking for their first win, but I think it comes down to who wants it more, WASHINGTON! will win while Parcells figures out what he's going to do with his team.

JEDIMINDTRICKS PICK OF THE WEEK: CAROLINA -2.5

JEDIMINDTRICKS RECORD

*PICK OF THE DAY/WEEK: 1-0

*NFL WEEKLY: 0-0

Thursday Night College Sept.14

The 5th-ranked Mountaineers are and have been bet up to a 16-point choice. Last year they went to Maryland in the third game of the season and scored a 31-19 win as a 3.5-point dog. The Mountaineers were to go on to an 11-1 finish (9-2 ATS) while Maryland finished 5-6 in both categories. Both clubs come in 2-0 after opening at home but the Mountaineers are 1-0 ATS after last week's 52-3 trampling of Eastern Washington and the Terps 0-1 ATS after failing to cover a 22-point impost in a 24-10 home win over MTSU.

Maryland: 18-5 Under off a home win
West Virginia: 8-1 ATS off an ATS win

The betting public is correct when moving the money line in MARYLAND games 50% of the time since 1992. (61-61)
The betting public is correct when moving the money line in MARYLAND games 45% of the time over the past 3 seasons. (9-11)
The betting public is correct when moving the money line in W VIRGINIA games 60% of the time since 1992. (78-52)
The betting public is correct when moving the money line in W VIRGINIA games 63.2% of the time over the past 3 seasons. (12-7)

LAST THOUGHTS: THE SPREAD WILL BE THE DIFFERENCE IN THIS GAME, I DON'T SEE ANY UPSET. MONEY LINE IS MOVING IN W VIRGINIA WAY. STONE COLD LOCK (BUT THERE ARE NO SUCH THINGS AS LOCKS) ON KNBR 1050 WVIRGINA. HE'S 2-0

JEDIMINDTRICKS PICK OF THE DAY: WVIRGINIA -16.5 (TRADESPORTS LINE)

PLEASE POST COMMENTS, THIS IS MY FIRST BLOG. I'D SURE LIKE SOME FEEDBACK AND YOUR PICKS HERE. PLEASE COMMENT IF YOU THINK THIS NEW BLOG SHOULD STAY.

Bob Ryan is unhappy that Deion Branch invoked "I've got to feed my family"

I disagree with Ryan (registration required), and wished that he and Dan Shaughnessy--Mr Benedict "Curse of the Bambino" Arnold--learned some class from this great sportswriter, who was their colleague for many years.

Yes, Deion would have made $1.5 mil this year, which is a ton of money for 99% of us who live in this wealthy land. But what if he sustained a career ending injury this year, which can happen in practice or the preaseason, never mind a game? He would be released, and end up doing what?

By locking in a guaranteed signing bonus (I don't know what it is right now, but guess it's at least $5 mil), even if he sustains same injury and is released, he can send his 3 kids to college and have a modest sized retirement egg. In the meantime, Bob Ryan will be celebrating his 40th anniversary with the Boston Globe in 2008. Which is about 10 times the career span of an NFL wide receiver.

UPDATE: Michael Felger (who is not the most popular journalist in the Patriot locker room) has a fairer assessment (registration required):

The most recent collective bargaining agreement banned five-year deals for second-round picks and lower, so the Pats could no longer employ the tactic even if they wanted. Unfortunately, that was too late for Branch, who has been hammered by fans for not honoring his contract. The reality is that Branch was going to be forced to hold out either as a rookie or as a fifth-year veteran. Tight end Benjamin Watson, who signed a six-year contract as the last pick of the first round in 2004, may end up doing both.
The only other option available to Branch (or any rookie) was to do what third-round pick Guss Scott did in 2004. Scott opted for a little-used provision in the CBA that allows rookies to sign a series of one-year, minimum-level tenders with no signing bonus. The hope is to play well and hit restricted free agency after Year 3, or at least use that leverage to get a suitable long-term deal from the club beforehand.

How’d that work out for Scott? He tore his left ACL in his rookie preseason and his right ACL early in his second year. He’s now out of the league. He never got paid. In hindsight, Branch and his agent played their situation well.

UPDATE: Deion is getting $13 million in guarantees from Seattle, the Boston Herald reports. If I am one of Deion's boys or his wife, I am celebrating. What if he were Bob Ryan's dad? Would Ryan say, "aww Pop, you gotta honor that contract"? If Deion did, I would actually find that honorable, but I say a man who puts his family ahead of his own honor, that's a man I could respect.

UPDATE: Only $7 million is an upfront signing bonus, with the $6 million being an option bonus in 2007

I am a wittle scay-ud of the pwesidential fwontwunnuhs

Hillary scay-uhs me because, for some reason, when she says she's a diehard Yankee fan, I don't believe her. And if she mispresents something as sacrosanct as her sports loyalties, who knows how much weight to put on her political statements.

McCain scay-uhs me for a completely different reason. He is a war hero and patriot, but I don't think he understands how his legislative passion can lead the country away from its Constitution. Here is a good article (via Instapundit) on the law that bears his name, which suppresses free speech.

As an unwashed, uneducated bwog-guh, I am no expert on the constitution. I haven't studied it with teachers since middle school (back in the 70s). Since allegedly entering adulthood, I have read a few histories, biographies, and various and sundry documents like the Federalist Papers and Constitution. And simple me cannot square a law that prohibits election speech with the First Amendment.

If it came down to McCain vs. Clinton, I don't know who I'd vote for. And it is scay-wee!









Falling oil eases inflation, boosts consumer spending, creates jobs ...

... and really puts the bears on the endangered species list. According to today's WSJ (subscription required):

The recent drop in oil prices could provide a welcome and surprising boost to consumer pocketbooks this fall, cushioning the economy from a falloff in home prices and construction while venting an important source of inflation pressure.

The easing of energy prices is an unexpected -- and little-noted -- positive amid economic anxiety over falling housing activity, previous energy-price increases and the possibility of recession.

"Some 99% of the questions I get these days are about the size of the drag from housing, and I think that far too few people are thinking seriously about the boost from lower oil," said Robert Mellman, senior economist at J.P. Morgan Chase. He predicted the retail gasoline price should soon hit $2.30 a gallon, based on declines that already have occurred in the wholesale price.

Mr. Mellman said lower gasoline prices should boost the annual growth rate of consumer spending a full percentage point and could lift fourth-quarter economic growth from a forecast 3%, at an annual rate, to as high as 3.7%. For now, though, his firm is leaving its growth forecast unchanged.

For now, the price drop's impact on inflation will be as important as its effect on economic growth. Edward McKelvey, economist at Goldman Sachs, expects the decline in gasoline prices to knock 0.4 percentage point off the overall inflation rate. The 12-month inflation rate was 4.1% in July. If Mr. McKelvey's calculations are correct and other prices continue their recent trend, that rate could fall to 2.4% in September, in part because a big jump in September 2005, due to Hurricane Katrina, will drop out of the 12-month calculation.

While the Federal Reserve focuses on "core inflation," which excludes energy and food prices, it blames the recent rise of core inflation on energy costs seeping into the prices of other goods and services. It is a principal reason the Fed, while leaving short-term rates alone at 5.25% last month, has said it is ready to raise them again if inflation pressures intensify. It could relax that stance if the retreat in energy prices hastens an expected decline in core inflation. Mr. McKelvey said that by boosting growth, lower energy prices could also make rate cuts less likely.

Bird flu trends, masked by media reporting

For those who have an interest in the TS bird flu contracts, I came across an interesting article (by way of Marginal Revolution).

It's just early September and already the number of confirmed cases of bird flu in humans has equalled that of all last year. And we are just entering flu season. Since the resurgence of the disease in late 2003 (four cases that year), there has been a steady escalation, with 46 cases in 2004, doubling to 97 in 2005 and as of today already 97 this year And it's only September. WHO now has recorded 244 cases since 2003, with 143 deaths (WHO).

Newspaper editors periodically tire of reporting on bird flu, or run stories that things are looking better, or that a vaccine has been devised. Many people have the impression the threat has bated. In truth, the disease is moving steadily forward, with no let up.

Branch has broken

Deion Branch got an offer he couldn't refuse from the Seahawks, and understandably took it. Darrell Jackson is bitter, but Seahawks fans should be optimistic, given their banged up patchwork reciever corps. And Pats fans should be soberminded, as the passing attack will be limited over previous years. But with the improved running game, I am still thinking the Pats can go 11-5.

My sympathies to all you guys who drafted Brady after Peyton was gone in your fantasy leagues. Hopefully you've got a good running game, too.

The New England beat writers have been pretty downbeat on how this turned out, but they felt the same way about Drew Bledsoe and Lawyer Milloy. Yes, losing both Branch and David Givens is rain on the road to another Superbowl, but I think that committing $30+ million to a single receiver will make the work of replenishing aging linebackers and Rodney Harrison that much harder. And Pioli/Belichick did pickup the highly rated Chad Jackson, his hammy (and/or slow grasp of the complex Weis offense) notwithstanding, which shows that they were working to improve passing productivity.

Farewell Deion, and thanks for the memories.

Please welcome Brandon Lang (aka jedimindtricks)

to the blog. He will be doing a weekly NFL picks post.

The only thriving bears are the species indigenous to

Chicagoland.

For those typical bears who are short US equities, US dollars, and long commodities, the Bear Ice Age is upon you. But I've been warning you all the time on this blog and in the chat pit.

We remember those we lost on September 11, 2001

On that morning, from my apartment on Duane Street that looked right out right at the Twin Towers, my wife called me at my midtown office to tell me that one of the towers was burning. The news had not yet hit the local Fox news channel yet, so the trading floor TVs were all tuned to CNBC as usual, and I was just asking those near me what they might have heard about it.

While we were on the phone, she saw the plane hit the other tower, and from seven blocks away, she felt our building shake. And so began the most surreal day of our lives.

It doesn't seem like five years have passed, but a lot has happened in that time. So we have moved on, and moved forward. Just as I am grateful for those who established and defended the freedom that my family enjoys today, I am grateful for the work done by so many to heal my city, and to thwart planned attacks around the world since then.

I knew some of the people who perished at Ground Zero, and others who almost were caught in the towers, but were running late for some personal reason. My wife and oldest daughter were affected, too, for the rest of our earthly lives--but not in the most profound and tragic of ways. And because I have had a few more days on this earth, I take the opportunity to say: God bless you, the reader of this humble blog, and the advocates of Freedom everywhere.

The Ides of Gridiron are upon us

Very exciting NFL game to start the season last night. Exciting in-game trading too, with trader Adverse buy $18,000 of PIT contracts when they went up by 4 points in the beginning of the 4th quarter. Sympathies to gambler Yellow Jacket, who zeroed out his account maxing out on MIA.

Happy season and profits to all this year!

ACLU Part II

Back to my flirtation with the ACLU. My email to the ACLU follows:

"I was wondering where the ACLU stood on the proposed gambling bill that would prohibit American citizens from using internet gambling sites but allow state owned monopoly gambling venues such as the lottery and horse racing. If the ACLU is against this bill then how would they fight against it? Thanks for your time, Diem"

Their response was:

"Dear Friend,
Thank you for contacting the ACLU. Our web site has a search feature located at the top of the home page. By typing in a search request, you should find the latest news, court briefings and archival information on this topic.

If you are not already an ACLU member, we encourage you to help support our aggressive work on the issues you care about. To join please visit http://www.aclu.org/contribute/contribute.cfm or call 1-888-567-ACLU.
Sincerely,D. BarberCorrespondence Manager, American Civil Liberties Union"

The search for “gambling bill” did not result in the inteded results. About the only thing I could find in this search was a reference to some sort of a “Gang Bill” that would include gambling offenses (presumably from illegal bookies?). This is obviously not what I was looking for.

As stated in an earlier blog I stand for the ideals that are the foundation of the ACLU. In fact I think most Americans do. On the other hand I unfortunately see them as a liberal organization whose tool is the court in the US justice system, not the court of public opinion.

In related news, the thread Cav posted earlier has Kyle1111 bringing this article to our attention. This is a very interesting article worth reading and thinking about.

By the way Kyle1111 I could not disagree more with your earlier post on September 1st that the maximize liquidity we TS should in effect tax US customers. In fact few things would hurt liquidity more then that.

Thats all for now, take care all

Alas, higher fees at TS. Does liquidity go up or down?

I take my 2 weeks of vacation (one highlight of my visit is pictured), read a bunch of smart posts by Diem, only to find out that the cost of trading at TS has just gone up. Now this in itself will reduce liquidity, but incentives have been shiftily shifted, so that winners pay (increased) expiry costs, and price takers pay increased trading costs ... but only in-game.

Fees for taking prices before the game have been eliminated. A big negative reaction from high volume traders and in-gamers found on this thread, and understandably so.

But I think there's a shot for liquidity to increase, as the costs are all back-ended both into time and into the winners, which should draw more trades and larger pre-game positions, as well as more newbies, whose losses will be a little less painful. It's one of those bets that only someone with access to TS' audited financial statements could settle, though. Here was my 2 cents:

. . . I agree that the expected value of each contract's return has become more negative by 2 cents. It is a minimum 0.4% inflation. Of course that is a disincentive, but frankly, the only way for fees to be reduced for us is if a worthy competitor to TS steps up and we are compelled to move our business to them.

Other than that, I believe that the market equilibrium will recalibrate to adjust for the payout scheme. More so, I believe that, since winners will be subsidizing losers, more newbies would come in, and they would last a little longer. And as long as the winners are still winning, they won't quit trading.

Finally, while liquidity in-game could be markedly reduced, liquidity before the game could be increased greatly. People would not be guaranteed to lose 4 cents everytime they took a price. They could thus move in and out of contracts in greater volume, and if larger resultant positions were established before the game, then TS wins.

I still think that multiple market makers would be the best way to improve liquidity. The Nasdaq model is superior to the NYSE model.

ACLU Part I

As I have alluded to earlier I am a libertarian… NOT to be confused with a liberal. I believe that the burden of proof falls on the Government to show that society needs its interaction. So long as I harm no one other then myself I feel I have the right to do it. I believe that personal liberties should be strongly protected and I also believe that the closest thing to a national religion (our founding fathers) also agreed with these ideals. That is one reason why I feel so strongly against the gambling bill.

If you are reading this and you truly believe in the rights of the individual to gamble over the internet on sporting events then we are at a point when we need to decide if we are going to do anything about it. Personally I have contacted both of my Senators and my Congressman, and encouraged (successfully) for my sister, mother, and two friends of mine to do the same. Not one response as my Congressman voted for the bill, and I can only assume that my Senators will do the same if given the opportunity. So if in fact we want to make a difference what should we do? It occurred to me that perhaps the answers were to find an organization that would have sympathy for us and contact them on our behalf and encourage them to fight the just fight.

This brought me to looking into the ACLU. After all, their stated mission:

"to defend and preserve the individual rights and liberties guaranteed to every person in this country by the Constitution and laws of the United States”.

So I reached out to them via email. More on that later.

Box Office Blog

I do not trade futures on box office returns. I have never taken the time and energy to research the mechanics of the market. All I know is that “Aquaman” from Entourage broke Spiderman’s record. But for anyone who does trade futures on movie box office returns may find this Freakonomics blog interesting.

In other news:

As many traders know greed isn’t always a bad thing, but when you’re a PR machine like MLB this is certainly a black eye. Its not enough that they bribe economists to lie about the benefits of publicly subsidized stadiums, then bribe the politicians to ignore the truth. Now their doing everything they can to suck every ounce of money from us. This time from our fantasy leagues.

For anyone who is intersted this seems to be the deal (and I must admit I do not have the time and energy to research this to speak with 100% confidence). Baseball statistics are within the public domain. If Barry Bonds hits a home run people are allowed to collect that information and process for fantasy purposes. But for some reason, if we want to use his likeness, or the team names and logos we still need their permission. For those interested the Leagues negotiate with the players unions for an agreement to use their images for video games (some leagues restrict this to one supplier). In addition any individual player has the right to refuse to sign the rights to negotiate on their behalf away to the players union. This is why we never got to see Michael Jordan in the old video games (NBA Jam), and why we see no Barry Bonds (this adds to the long list of reasons the players dislike Bonds). Like I said, I’m not 100% sure I’m dead on with the terms of this deal. I am still trying to figure out the difference between allowing a venue to do fantasy sports without anyone’s permission, and produce video games without anyone’s permission. In addition this is all pending an appeal filed by MLB. God forbid they lose out on their chunk of my $15 league fee that is allocated toward the site managment. When you think of all the benefit fantasy sports brings you would think they would subsidize its use, not try to restrict it.

Lieberman's contract is in the low 60's. This could start to get interesting...

Liquidity

One of my favorite change of pace writers is P.J. O’Rourke. He is a fellow libertarian who happens to be a great writer and humorist. In his book titled “Eat the Rich” he travels around the world examining different economic systems with the goal to figuring out why some work while some others fail. He goes to areas where socialism works, where it doesn’t work, where capitalism does not work, and naturally where it does work. Where better to go where capitalism works then to Wall Street? And so after experiencing the hectic lives and opposing points of views of traders he comes to this great epiphany:

“”What,” I asked all the Wall Street people I interviewed, “does the investment industry give to society?”
But this time they had an answer.
“Liquidity,” said the $2 billion money manager.
“Liquidity,” said the investment banker who’d described how men’s thoughts were on pecuniary B-girls.
“Liquidity,” said the other investment banker who’d told me things could move stupidly.
“Liquidity,” said the Irish specialist broker.
“It provides liquidity,” said David
Liquidity is the Wall Street word for having things you can do with your money and being able to do them. Liquidity is the essence of the free market…”

I follow economics so I understood what he was talking about but I did not appreciate it until I began to trade on tradesports. As far as gamblers go until now a liquidity problem was when you ran out of credit on all your local bookies. This is the key understanding gap that would bring in more people ot tradesports. More liquidity is good for all tradesports traders. Liquidity in tradesports provides information on future outcome of events, it provides more opportunities to trade, and most importantly it provides a convergence toward efficiency. If you are a gambler with limited experience in tradesports it is liquidity you want to focus on as it is the key to understanding how to make tradesports work in your advantage.

Had my fantasy football draft today, so I'm out of steam. Trying to win it for the 3rd straight year. In case your into Baseball Prospectus you should check out the web site by the guys who wrote Football Prospectus. It give a very interesting point of view into the sport of football.

Winner’s Curse

For those familiar with this site should know quite well about the recent gambling bill that was passed by the US House of Representatives. Now it goes to the Senate which leads us to the '>gambling bill contract in tradesports. The contract is currently trading in the $15-$25 range. My question is does this price reflect the true probability of the outcome of this event? I feel there is a winner’s curse at play here, when the winner of the contract is left with something less valuable then they anticipated. The recent developments of the Betonsports website are a startling one. To quote from the article:

“In a statement issued to the London Stock Exchange, BetonSports said it hoped to refund balances to U.S. gamblers and to pay some salaries of employees in Costa Rica and Antigua, where the company's offshore operations are located.

Those payments, however, "will depend upon the company's ability to persuade banks and cash processors to release its funds."

Granted this is a different situation then if the gambling act was approved by the Senate. In that case tradesports’ assets presumably would not be frozen as it appears as though betonsports has. None the less this creates uncertainly. A quick quote from the pit many weeks ago when this was a hot topic (I saved it and changed the names since I never asked for their permission)

Person 1: I doubt it will pass, yet it has an effect, I have far less in here than times past
Person 2: true..whatever i have here...if it's gone so be it...
Person 2: of course my far less is prob a lot less than yours...lol...
Person 1: at one point had some decent change in here, a bit hesitant right now
Person 1: it's all relaitve 2, to each his own

So not only is the prospect of this contract driving some liquidity away from tradesports, it distorts the gambling contract price. Who wants to “win” a contract that brings assets that may or may not be usable? Just to set the record straight, if this bill does in fact pass we should get a check in the mail for the reminder of our balance. But anyone who tells you it does not create perceived uncertainty has not examined the issue.

Inefficiency vs. Personal Bias

Looking past BannedChatter’s selfish promotion for his new site in the latest comment (at least comment on my article!) I decided to take quick look at his site. Aside from the appealing photos (adults only) there wasn’t much other then personal opinions. It got me thinking of the key to successful sports gambling. In my opinion the key is the recognition between market inefficiencies and any personal bias we carry over every time we watch a game. Run differentials are about as sophisticated as BCLI gets. So why should we take this into consideration, and how much confidence do we have in it as a parameter? What kind of betting strategy is there for us with this information? How do we process it?

On to other items:
The Ted Lilly confrontation is interesting for alot of reasons. If this is in fact the “sinking ship” that Shea Hillenbrand subtly suggested on the Jay’s chalk board it appears as though the captain just bailed (or at least got cabin fever and lost it). Maybe there’s value in the under for the total wins contract.

There was a lot of activity yesterday in the Democratic Primary contracts. I wonder if anything happened that slipped under my radar. Our favorite '>Ex-first lady seems to be taking the worst of it as her contract to win the primary has fallen about 10 points over the last month or so. Is there a connection to Lieberman (and his similar pro-war vote)? If this is the case, why all the activity yesterday? (I tried again to post this chart and this link was the best I could do. If anyone knows how to do this please give me a heads up)

On the Jacqueline Mackie Paisley Passey front, here is some harsh criticism. Now, I normally don’t take these things personally, but as my wife and I have been trying to have kids for quite some time this type of thing is disturbing.

Glad to see Verlander is back, a healthy Verlander is all Detroit need (in addition to what they already have) to carry the AL Central division (and win that contract). Now the big question is what to do when Maroth comes back?

Thats all for now. Take care all.

Polls vs. Information Markets

Back to the Lieberman issue, with some more from my enlightening conversation with AlanBStard I mentioned a few posts below:

AlanBStard: It is interesting that it's trading much closer than the PA Senate race, which polls indicate is getting very close. 6 point difference as of yesterday, and polls tend to skew toward Dems.
AlanBStard: Market didn't respond at all. I picked up a Santorum at 21.5 just for kicks.
Diem: poll bias?
AlanBStard: At times. Even if not, the difference is still approaching the margin of error, and Casey hasn't done much of note recently. Quinnipac's analysis that he was merely losing votes to the Greens doesn't make any sense whatsoever.

This got me thinking about the correlation between polls and zero sum contracts such as the ones offered at tradesports. Imagine two campaigns taking place, both with two candidates. In each the lead candidate is ahead by 55%. The difference between the two campaigns is that the election in the first is a day away, while the election in the second is six months away. Would they trade at the same price? No, we would be more confident in the first campaign’s expected outcome, and I would expect the price to trade at closer to $99 then $55, while in the first I would not be surprised if the contract traded closer to $55. A new confidence interval would be useful (aside from the typical +/- a small percentage). Purhaps that is what makes this style of information markets so attractive. Maybe this is very obvious to those who follow polls, it is new to me so I bring it up. An update on the race.

On to less important matters. More proof the Cards are going down. This from the most respected name in journalism (outside the daily show). If this doesnt move that contract nothing will.

If you’re looking for a good laugh check out Ozzie Guillen’s comments at Baseball Prospectus (this link does not require a subscription). This guy’s act is going to wear thin if they start losing.

Another A-Rod Point of View (with the same conclusion)

So, Torre decides to bat “E”-Rod (22 errors to date, tied for the ML lead… but that’s a different story) in the five hole in yesterday’s first game of a double header. I saw this and took the opportunity to do some analysis of every five hole hitter in the big leagues. Keep in mind I began the data collection once I noticed his hitting slot (game 1) so some of the info comes from games two days ago (blogging doesn’t pay what it seems, so time constraints limit the analysis). Salaries were collected from CBS Sportsline, and some players had missing values (Choo, LaRoche, Luke Scott, Bill Hall) so I inputed the league minimum.

Some quick number crunching says that Arod has batted 16% of his AB’s in the five hole playing 19 games there.

Some interesting Arod info:
Arod makes $25,680,727
Next highest (almost half) is Sexson at $13,000,000
Total 5 hole hitters salaries at $107,766,442
Average 5 hole hitters (with Arod) is $3,592,214
Average 5 hole hitters (with out Arod) is $2,830,541
Arod makes 9.07 times as much as the average 5 hole hitter (with out Arod)
Though Arod consists of about 3% of the 5 hole hitters he makes about 24% of their salaries.

Other observations:

Overpaid is Sexson (see above) and Burrell at $9,750,000
Some best values: Wright ($374,000), and Morneau ($385,000)

This once again reinforces the Moneyball philosophy of not being afraid to play the young guys, and doesn’t even take into consideration Arod’s defense (or lack there of).

Wisdom in a bronze star

Had a little chat with AlanBStard (a lowly bronze star status like myself so I have no inferiority complex when approaching him about a subject). We were in the pit and I asked him what he thought of the Lieberman contract. This was his response:

AlanBStard: Diem: Assuming the Democratic endorsements don't mean anything (and they probably won't) and the DNC is smart enough not to get involved (judging by Dean's statements, it isn't), I think Lieberman takes it and stays in the Democratic caucus.
AlanBStard: Lamont is doing a respectable job of repositioning himself, though.

I have to agree. Short of Lieberman taking one for the team that just stabbed him in the back and exiting the race I think he’s a sure thing. I am neither a Democrat nor a Republican, but I do find a sick fascination with following this race (aside from my account balance… which isn’t sick, but a fascination of mine). I cant figure out the Democrats. Ever have the unfortunate task of explaining what a Democrat is to a foreigner? I have on multiple occasions and it doesn’t get any easier. But as far as the contract goes I only see it going toward Lieberman. Lamont spent all his resources just getting to this point, Lieberman knew he was in it till November. If I can figure out how to post this chart on this blog I will, but its trading in the mid 60’s now, only gonna go up.

As for baseball maybe Jake Peavy is the only guy in the world who pitches worse when he can’t see. Maybe he should start pitching like Uggy Urbina. For those of you unfamiliar with the machete yielding middle man’s mechanics (say that ten times) he would stare at third base until he released the ball. I try to imagine what it would be like to be a right hander facing a guy that’s about to throw a mid 90’s fast ball without even looking at his target before he throws it and I crawl up in the fetal position. Apparently that’s what Peavy needs, he should wear one of those blast shields in Star Wars and trust the force every time he takes the mound.The point? There is something wrong with Peavy, and it is not his eyes. But I still stand by my Card’s comments. Play the over in the Red Sox double header, both bull pens are gonna be depleted and someone is gonna be left to take one for the team.

Have a nice weekend everyone.

Have a safe trip Caveat

Cav, as you read this in your Starbucks Cafe, we can tell you that we miss you already. But your mission of doing research on the strange poeple of Canada is a noble one, for as the famous P.J. O'Rourke once said, “Very little is known of the Canadian country since it is rarely visited by anyone but the Queen and illiterate sport fishermen.” (no offence to illiterate sport fishermen… why I would be apologizing to an illiterate on a blog I don’t know) Enough about Cav’s travel plans, on to some potential inefficiencies.

It turns out Jake Peavy is legally blind without his contact lenses, which he has been without this year until today. Could there be something here? Then again I remember saying the same thing after reading a Peter Gammons article (hope he is doing better) where he talked about how Peavy had a detached retina in his eye that was fixed right before the season began. Is there value in the SD game? I hope not, I have Cain on my fantasy team (and I need wins... then again who doesnt at this time of year in fantasyland).

The St. Louis Cardinals are having big problems. It blows my mind how the contract to win the division remains so high. Granted the Reds who trail them are only 1 ½ games are not a good team. But the Cards don’t impress me. Take away Carpender and Pujols and they are a bad team. It is scary to think that if the Cards were in the AL they would have the SEVENTH best record (behind the Blue Jays). In fact they would be worse then that since they would have to play stiffer competition. But they are not in the AL, they are in the minor leagues of the major leagues… the NL Central. Bad divisions = uncertainly = high variance. There is no way they should be trading in the 70’s. (I would post the chart and compare it to some of the NL West teams to compare but I am relatively new to this… in due time) I am not saying they are not going to win the division, I am saying that their odds are less then 70% to win it.

Take care all

Four Days, and a fortnight

For those of you suffering from NFL countdown (like me), check out the PGA Championship this weekend. I'm long a little Mick, Vijay, and Furyk.

I will be off on vacation for 2 weeks. During this time, the blog will be powered Per Diem. And of course, those who are generous with their comments. See you on the other side.

PPI data kills more bears today

PPI (MoM) 0.1%; Ex-Food & Energy (MoM) -0.3%

I begged, begged you bears to reconsider. SPX futures trading up 9 handles at 8:33am EST.

UPDATE: CPI data also indicates benign inflation (MoM) 0.4%; Ex-Food & Energy (MoM) 0.2%. SPX futures trading up another 6 handles at 8:31am EST. The market is pricing in a 30% chance of one more 25 basis point FOMC hike in 2006. From the WSJ today (subscription required):

WASHINGTON -- Higher energy prices pushed U.S. consumer prices higher in July but underlying inflation came in below expectations, breaking a string of four-straight elevated readings due to a steep slide in clothing prices.
MORE ON INFLATION

Meanwhile, home construction retreated for the fifth time in six months during July as sliding sales and rising inventories turn builders more conservative.

Coming on the heels of a surprisingly restrained report on July producer prices, the consumer price data should provide some comfort to Federal Reserve officials that inflationary pressures aren't taking a significant hold in the economy, though they remain a risk.

Lieberman 46%, Lamont 41%

Update, here. (via Drudge)








UPDATE: Lieberman apparently "angers" fellow Dems. I weighed in the TS Forums with this last week:

I think that there is a slim chance that Lieberman loses to Lamont. If all the big name Dems make good on their promise to campaign for Lamont, if a few take shots at Lieberman and Lamont lands a few blows himself in the general election, some of the marginal voters could be swayed into projecting a black sheep perspective on Joe.

Bet with your head, not your fantasy team

It was a tough day on the gambling front for me yesterday. Prompted by my emotions of running a close 2nd place in both my fantasy baseball leagues I decided to put my money where my optimism was. With Maddux and Schmidt on the mound (and neither on either of my teams) I took the over for a couple lots. It took them ten innings to get one run in. The other big news of the day is that the Tigers got swept by apparent pitch stealing White Sox (I have the Tigers to win the division).

So why should you care about my fantasy team, or my portfolio? It got me thinking about the different types of bets out there. What is the optimal type of bet? In the SF contract I lost my entire investment. In the Tigers contract I only lost a small portion (if you want to think of it as “lost” considering I bought it at around 20). Assuming we do not like a high variance with our investments (maybe not the best assumption considering we are talking about sports gambling here, but one I still think holds true) then it would appear that the latter has an added positive characteristic to it. Maybe the traders have experience with this type of decision making going on. It’s a dynamic that’s relatively new to the gamblers since we can actually go short on some of these contracts for the first time.

In NFL news, after losing Portis in a run happy Gibbs offense I would have thought the Washington futures would fall. If it is long lasting then they are in trouble.

In closing, always go with the home team that is opening up a new stadium in pre season games. They are the only ones with an incentive to win.

We are shaking the tree

Jacqueline Passey is back in the market, after breaking up with her professional poker playing boyfriend recently. I am not sure whether to add her to Friends of TS, but she had a great debate with Greg Mankiw on how poker playing is not as bad as he thinks. (via Marginal Revolution).

I think she is worthy of some dating investment from TS members, although few of us might actually be worthy or single. Or both. Personally, her expressed desire for a man who is an athiest disqualfies me. And turns me off, even with that disarming smile.

Here is an initial litmus test: if you didn't read through the first link in its entirety, you probably won't be able to get on the basepath, nevermind getting to first base.

P.S. Here is this blog's first post on Mankiw's anti-gambling sentiment. Mankiw was nice enough to explain to us in email that he is not in favor of prohibiting internet gambling; he is just trying to shame people out of doing it.

Newbie Scum

I will be blogging on occasion when Caveat Bettor is away doing things more important then… promoting maximizing liquidity into TradeSports (what nobler activity can there be?).

For those of you not familiar with Tradesports I should mention the forum. It in essence allows gamblers to gamble (trading?) like traders, and traders to use their tools to trade on sporting events (gambling?). Alright, lets not get caught up in the semantics; it provides a market similar to the stock market on a variety of events, including sporting events.

What we are left with are two types of people. One is the traders. You can find them in the pit talking about oil prices, Dow Jones fluctuations, and bear vs. bull debates. Then there are the gamblers who shuffle into the pit after the Dow closes, talking about why there is a delay in the lines for the Cub’s home games (wind reports not out yet), the optimal time to trade a division contract (apparently right after the games are done), and the typical Yankees vs. Red Sox debates. I fall into the latter category. So while Caveat Bettor wears three hats (a trader hat, a sports hat, and a promoter of free markets and minimal Government intervention) I am simply a degenerate libertarian gambler.

Enough about me. Thanks to BUCWILD for posting this link in the pit today. I will have a detailed post next week on the ramification of this action, and how BETonSPORTS’ fallout may be an indication of not just future events, but also a signal of inefficiency in current contracts at TradeSports. (And if you think about it, there is no better way to increase liquidity then to talk about inefficency).

Thats it for now, hope I didn't mess anything up.

Honesty, it's such a lonely word

Two of the most honest constructs in my experience: emotions and markets.

Emotions are, of course, personal. Without being led by the intellect and followed up by consistent discipline, unconstrained emotions will lead to certain destruction. Fear will do that. So will greed, as many a TS member who's deposit quickly plummets to $0.00 has proven. But you can't fake an emotion. Joy, anger, peace ... it is what it is when you feel it.

Markets are interpersonal. Not so much relational, they are the transactional potential and realization of agreements over time. And unlike the individualism of emotion, more than one person must agree on a price to make it real, which is why the market mechanism and the price information it yields can be so valuable in informing public policy.

My good friend Chris Masse, the hardworking and pioneering predictive information markets blogger, had his response to the Freakonomics North Korean missile test blog post removed. Steve Levitt is perhaps the leading academic advocate of Tradesports. Here is Masse's censored comment, and here is a brief excerpt:

Thanks for airing this controversy. You’re brave.

I’d like to say to your readers that very few scholars have dared expressing their viewpoint publicly, because scholars need the data coming from TradeSports (and BetFair) to feed their research and publications. They fear retaliation from TradeSports (which has already retaliated against me for airing this dispute).

As you said perfectly, this issue is complex and there’s no clear cut. As I wrote, all opinions are respectable (expire to 0; expire to 100; unwind all trades and void all bets; or pay both sides).

Conflict is inevitable, even between people in whom I hold such high esteem. What strikes me as weird about this particular incident, is how Steve Sailer gets away with so much blood with his comments on the Freakonomics blog, and Masse doesn't get the same consideration. Perhaps Sailer's rants fuel a profitable controversy, while Masse's line of thought is unprofitable for the Freakonomics franchise. Just as Claudia Rosett is certainly not helping the UN with their fundraising. Basically a situation where the profit motives cannot be settled by a market, and people must resort to swords or words.

But before I am able to accuse Levitt of censorship, I'd like to know what his comments policy is. I had one of my comments there removed as well, and that contained 3 links to AEI-Brookings.

UPDATE: Masse's comment is back. So is mine. I am glad I stopped short of accusation. One love, one heart, let's get together and feel alright.

Limited blogging Thursday and Friday

I am away at a conference with business guru Jim Collins, author of Good To Great, and Ashish Nanda, Harvard Business School prof and author of The Risky Business Of Hiring Stars. Oh, and this other "expert", Paul David Hewson.



Will try to post as I am able.

Richard Posner & Gary Becker, on internet gambling

Federal Court Of Appeals Justice Posner says:

Internet gambling establishments have very low expenses, enabling them to offer an approximation to fair odds, and do not require any travel by the gambler. One would think fair odds an enormously attractive feature of Internet gambling to gamblers. At fair odds, which is to say with no loading expense (a gamblers' nirvana that Internet gambling, if allowed to operate without threat of criminal prosecution--which obviously drives up its costs--might approximate), the net utility of gambling soars because there is no longer a net expected financial loss.

Economics Nobel Laureate Becker follows, with:

Governments are concerned about online gambling primarily, I believe, because it threatens the revenue and other political advantages they get from taxing and tightly regulating various forms of gambling.

Supporters of this [gambling prohibition] bill argue that easy access to online gambling is dangerous because it encourages and strengthens gambling addictions. The fact is, however, that gambling is even less addicted than drinking, and is not nearly as addicted as smoking. Moreover, gambling addicts can already find many ways to gamble.

I favor allowing online gambling, given the weak arguments against it, the common human desire to gamble, and also that addictive aspects of gambling are greatly exaggerated. Indeed, I also believe it should remain tax free, along with purchases of other services through the Internet. For tax-free online gambling would put pressure on governments to reduce taxes and various restrictions on lotteries and other forms of gambling. Lower taxes and fewer regulations would give individuals cheaper access to ways to satisfy the mainly harmless desire to play games for money, and to bet on sporting and other events, including lotteries.

I have updated my Friends of Tradesports list, accordingly.

Another note of doubt for Da Bears to heed

Two Bryan Caplan posts in one TS day! Here is the latest.

A quick Pit conversation on legal outlook for TS

edwillers: i see the internet gambling contract is trading around 20; what's the consensus on tradesports legality currently and if that law passes?

caveatBettor: TS legality is a state issue

caveatBettor: states loathe to prosecute citizens [doing their own victimless thing] in their own homes

caveatBettor: TS is bound to return any monies to customers upon request of customer, or by regulatory requirement of US law

caveatBettor: but impulsive deposits via credit card would be eliminated

caveatBettor: only snail mail bank checks

UPDATE: I am not a lawyer. Speak to your own attorney for advice on legal matters.

Steven Leavitt, friend of TS, weighs in on the NK missile controversy

Here. (hat tip to my good friend Drugtest)

I am sooooooo ready for some football

The top volume 2007 Superbowl XLI contracts are: Panthers, Seahawks, and Dolphins.




UPDATE: Roger Goodell succeeds Paul Tagliabue as NFL Commish. Rozelle + Tagliabue has been the best one-two punch since ... Thomas Jefferson + James Madison? Which might portend the football equivalent of this?


Letter to predictive information markets experts

Don Luskin posts a letter from TS Member Nicholas Edmunds on the NK missile test contract controversy. This letter is being sent out to predictive information markets experts everywhere.

Today's myth-busting post ... i.e. free the bears

Yesterday, the Federal Open Market Committee decided to pause after raising the Fed Funds rate a record 17 consecutive times, from 1% to 5.25%. But the market sold off a little after the announcement, to the delight of the bears.

Now being a bear can be profitable, 3 months per year and 2 years per decade, on average. We just need to know which months and years. On the other hand, being a perpetual bear is dangerous, given the growth potential (and track record) of the US economy. I've previously posted a warning on how being short $1,000 of the Dow Jones Industrial Avg 90 years ago would result in a loss of an adjusted $2 million today. I post these warnings because some of my good friends are perpetually bearish, and I just hate seeing them losing their money while retaining their stubbornness--I would be happier if they could reverse those. Today's lesson is from a great communicator, Steve Conover:

In short, the knowledge content of the assets we hold abroad has to be yielding a much higher return to us than we pay on foreign-owned assets in the US, in order to explain the fact that we are still earning $30 billion (net) as we were in 1980. In other words, our assets abroad must be worth a lot more than the books would indicate, because there aren't many other ways to explain why we are earning (net) $30 billion today on foreign direct investment, instead of paying out (net) $210 billion that the books would suggest should be the case. For a good illustration of that key point, read the Euro Disney example in the paper.

We're running a trade surplus? Hmm, how long do you think it will take the mainstream media to catch on to that new point of view? (My guess: Not until after the next presidential election. If ever.)

Read the whole thing. If you have a few minutes, check out the site; he's also got great instructional graphics on scary things like debt and deficit; hopefully, the truth will set the systemic bears free, and they can hibernate with peace in their hearts.

UPDATE: Another nice take from Bryan Caplan, here, who says "The upshot: The dollar is not going to collapse. In fact, it looks like we should expect the dollar to slightly appreciate. As Neo says, "Woh." If only Warren Buffett and Bill Gates had read that Harvard paper last year, they would have more billions to help the poor now. And George Soros could have gotten some more Ned Lamonts prepositioned.

Epic Milestone: we get a guest blogger

My good friend Diem is now activated for posting. He will be blogging occasionally while I am out later in August, and he might end up staying on well after that.

Which graph looks more recessionary?

asks Irwin Chusid (via Don Luskin).

North Korea Contract Update: Department of Defense won't comment, defers to the White House

The controversy concerning the missile test contract remains unresolved in the minds of prediction markets experts (like Chris Masse and Jason Ruspini) as well as many TS customers. Chris Masse has provided a screen shot of a DoD discussion thread (second graphic), where the DoD states:

We will let the White House comments speak for us.

The White House press briefing can be found here, and Stephen Hadley (national security advisor, for the president) says:

It's probably -- it's a short-range ballistic missile. These went out about 275 miles, something like that.

I now must agree with the experts and customers, that expiring the contract at 0.0 is worse than expiring it at 100.0 or unwinding all the trades. The briefing was conducted on the July 4, and the DoD referral on its website is dated July 7.

(Note: I did not trade this contract, nor did I make any recommendations to others)

UPDATE: Corrected Hadley's title from "NSA advisor". Hat tip to my good friend drugtest. Please see his comments on this post.

UPDATE: Welcome, Freakonomics readers. Friends of Tradesports short list, with you-know-who, here. More on the North Korean controversy here and here, covering things over the last month. While I am not a tenth the genius of Levitt + Dubner, I was able to first report on this contoversy a month ago.

Business Week posts CEO Guide to Prediction Markets

Here. Imagine Congress outlawing a mechanism that could improve productivity and create more jobs. Now why would they want any of us to be less dependent on the government ... yeah, go ahead, make it all illegal ... (via Marginal Revolution)

Another recent post of mine on the win-win of prediction markets. An older post, criticizing the Internet Gambling Prohibition Act.

Bears get a break

From today's WSJ (subscription required)

Stocks are expected to slide at the open Monday amid a spike in oil prices after BP said it will shut down a major Alaskan oil field.

BP said it will shutter its Prudhoe Bay oil field in Alaska, taking crude oil off the market in a time of tight supplies and rising demand, following the discovery of a corroded pipeline and small leak there. The shutdown by the London energy titan, disclosed last night and expected to occur over several days, will result in curtailment of an estimated 400,000 barrels a day of oil, almost half the total daily production from fields on Alaska's North Slope.

Crude-oil prices jumped $1.53 to $76.29 a barrel in early trading Monday on the news.

UPDATE: The Oracle of Omaha stops out of most of his USD short. (via Wall Street Folly)

Why is the Pit so quiet?

caveatBettor: Why is the Pit so quiet?
a) bulls spending their winnings on destination vacations, with limited internet access
b) bears too depressed to chat
c) calm before NFL starts up
d) all of the above

Silentconqueror: d)

UPDATE:

BUCWILD: E) bitter nk people F) people tired of the provocateurs G) internet gambling concerns

(Note of clarification: I believe the correct application of "bitter nk people" is meant not for the North Korean people, but for the TS customers who bought the missile test contracts).

For all you bears ... another warning you should heed

Rather than ride your shorts into oblivion. Even a bear can understand this explanation. Or go the way of the dinsoaur.

Even earlier warning for you, posted back here. But hey, it's your money. I can't help how easily it parts from you.

UPDATE: I begged, begged youse beeahs ...

UPDATE: Another timely, rational point, against the URSAhysterics, simple for someone with some high school to comprehend. I bet USA Today also hires journalism graduates (who tend to underemphasize stuff like economics, law, math, science and technology courses--if ain't liberal or arts, it's useless to such students).







LaMont Lieberman contracts

Ned's making his move. Some of his associates' moves are worth questioning.










Contracts on Castro ... but not at my favorite place to trade them

Story here. (via RawStory).

My good progressive friend sellSELLsell and my crazy commenter BCLI should both feel some vindication right now.

Baseball trade opportunities ... lost forever

Guy Kawasaki linked to this Malcolm Gladwell review of the Wages Of Wins. I haven't been following the NBA since Len Bias and Reggie Lewis left the scene, but it occurred to me that this was relevant to all the MLB trade chatter in the Pit.

I've been busy with work, so haven't had much chance to join the banter, but I did briefly debate with fellow chatters about the Red Sox giving up Jon Lester for Andruw Jones. A friend mentioned that it might have been a 3-way with Roy Oswalt involved. Anyhoo, my point on the Lester-Jones trade was that Lester is making about 1% of Andruw Jones' $14 million, and he has the upside to throw for the Bosox for another several years. The counterpoint was that if the Red Sox could win the World Series this year, it would be well worth it.

I'm not sure that one can throw away that huge financial and early career upside for a fleeting "if". Let me know if you agree, disagree, or what your GM move would have been before this deadline.

Landis, testosterone testing, maybe losing his title ... is there a contract somewhere in here?

I think so, especially if we don't need to depend on the Department of Redunancy Department for confirmation. I just emailed TS with a suggestion.

Derek Lowe (not the baseball pitcher) has some interesting scientific perspective here.

UPDATE: More about bicycling prohibitions being a generally bad thing, from Jacob Sullum at Reason. (via Everyday Economist). I wish Congress could understand it's also true about online trading of futures.

TS decides to expire North Korea missile contracts at Zero

Even though missiles left North Korean airspace, TS has decided to expire the contract at 0. Most customers and prediction market experts thought that it would be better to unwind the contracts or to expire them at 100. (Personally, I think TS should have expired them at 50.0, but that might have gotten more people more upset).

It's a big black eye on the stated goals of this blog.

More to follow.

UPDATE: Masse's recent post today concludes:

The public record suggests that TradeSports should grade the bet as a winner. If TradeSports go by the intent of the contract, then the bet is a winner. If TradeSports go by the letter of the contract, then its staff should get confirmation that the missiles didn't leave North Korea's airspace, which the US DOD will never say, of course. Thus, in both cases, the bet is a winner. However, if paying the "yes" speculators at this late time is problematic, then another solution is to unwind all trades and void all bets. In any case, TradeSports should work on better criteria for wording bets. In conclusion, this is a difficult situation, but expiring this North Korean Missile prediction market at 0 is not the right way to go.

CORRECTION: My source of the above quote was from Masse. He originated it from Sports Book Review.