aRod now inspires a buzz on BOOING

Skip Bayless, on ESPN.

Chris Masse's North Korean contract roundup

Lots of input, here. Includes input from John Delaney, CEO of TS, as well as luminaries like Eric Crampton.

This blog has also posts here, here, and here.

My personal view remains that a poorly constructed contract creates a lose-lose situation. TS will either lose credibility on strict contract enforcement, or else it will lose credibility at providing contracts that make predictive sense. How can TS gain get past this lose-lose situation? Comments welcome!

A new day in the Pit

The MUTE feature is now live! I'm not sure if I'm going to be using it on this guy, yet.

Blinding me with science ... contracts

Tom Bell has a great paper on the great value of prediction markets in science:

The scientific prediction exchange would promote progress in the sciences and useful arts in a variety of ways. By rewarding skilled claims about those public goods, the SPEx would promote basic research and development.115 By aggregating, quantifying, and disseminating traders' consensus opinions about disputed questions of fact, moreover, the scientific prediction exchange would produce a vital input for promoting the sciences and useful arts: Accurate and timely information about progress in those fields.116 Even those of us who merely watch trading from the sidelines stand to learn something about the drama and value of scientific disputes. Reporters would find claim prices on a scientific prediction exchange offer a quick, objective, and neatly packaged way to follow esoteric debates. Scientific prediction exchanges would thus
fund, measure, and publicize progress in the sciences and useful arts. Scientific prediction exchanges offer to deliver those public goods at little or no public expense. In contrast to patent and copyright rights, the rights created by scientific prediction exchanges do not impose deadweight social costs.117 Those who buy prediction certificates get only the right to receive payment in the event an associated claim holds true—not the right to prevent anyone from enjoying progress in the sciences or useful arts. Far from enclosing public goods, prediction markets help to create and share them.

He also talks about the problems with U.S. law, and proposes some approaches:

Freeing scientific prediction exchanges from the failure of U.S. law takes a fair amount of work. It gives appeal to the prospect of escaping U.S. law altogether. As Part IV.A explains, though, there remain convincing reasons to endure and ultimately redeem U.S. law. In pursuit of that worthy goal, Part IV.B describes and evaluates several legal strategies for liberating scientific prediction exchanges from the risk of unduly burdensome regulations or outright prohibitions. Each of those strategies leaves success uncomfortably doubtful, however. Legal uncertainties continue to haunt scientific prediction exchanges. Part IV.C thus offers a statutory cure: the Scientific Prediction Exchange Act.

It would be great if our elected legislators knew a bit about law, economics, and/or innovation incentives. However, the evidence seems to suggest that they know very little beyond getting votes, as this review of The Moral Consequences of Economic Growth, a book on government programs, argues.

UPDATE: Tom Bell debates Senator Kyl on internet gambling.

Banter in the Pit: Baseball and US stock market

caveatBettor: Diem do you know the TEX revenues? I know NYY is approaching $400 mil and BOS is around $250

caveatBettor: NYY payroll is $195 and BOS is $120

caveatBettor: exclusive of payroll tax

Diem: dont know it off the top of my head

caveatBettor: 70% of fomc pause in august

caveatBettor: crude dropped a buck to 73

caveatBettor: treasury yields back under 5%

Silentconqueror: 200pt day?

It's been quiet in the Pit this week, vacation and stuff, I guess.

Don Luskin is catching up on the North Korean contract

Unfortunately, he doesn't quite match the level of due diligence in his successful fiskings of Paul Krugman and the NY Times. Luskin says that, if needing to choose between the letter or the spirit of the contract, choose the spirit. But there is another complication, namely whether any of the missiles actually left NK airspace. If only he had read my post, from a couple of weeks ago.

My hindsight view is that the contract should have been just missile test, without any airspace condition. Then it would be much easier to choose the spirit of the contract.

UPDATE: I guess Luskin is in a post-vacation slump. He links us to this, when he should have also linked to this. But I'll still keep him at the top of my bookmark list.

UPDATE: Based on the nameless commentor on this post (and I appreciate your comments), I did a search at the DoD site http://www.defenselink.mil/. I also did Google and ask.com searches for "Department of Defense" + "North Korea" + "missile" + "test", but did not find any confirmation of a missile leaving NK airspace. So, while I accept that an NK missile did leave airspace, that has not been confirmed as far as I can find. Perhaps the Nameless Commenter could provide a link to the DoD confirm? Or just a DoD suggestion, even?

Chris Masse, prediction markets blogger

links to our humble blog. I must return his favor (check it out).

Light banter in the Pit: Landis, Enron, and Aunt Millie

mcwombat: what happens if landis loses tour win? how does ts handle?

mcwombat: probably already discussed, i missed it

AlanBStard: mcwombat: Usually the contract terms preclude any future revisions to the result.

mcwombat: good enough, don't how else they could remedy..thanks

caveatBettor: i want my money back for those $20 Enron shares

caveatBettor: oops $15

mcwombat: landis worked for enron?

AlanBStard: cB: You were Aunt Millie???

caveatBettor: maybe ...

AlanBStard: (Yes, I know, Aunt Millie was supposed to be a California electic customer, but I still feel it is a relevant inquiry.)

caveatBettor: aunt millie was done in by her state legislators for price fixing laws

caveatBettor: it is amazing that businesses cannot price fix but the govt can

Pit has been quiet today. Come visit if you get a chance.

A few charts on White House 2008

Current approvals (chart from WSJ)

Dem winner contract




Pub winner contract






Contracts In Everything: Sony Playstation 3

In the WSJ today (subscription required):

Sony still faces a big challenge ahead – the launch of its PlayStation 3 videogame console, which is expected to be the centerpiece of Sony's product lineup. The console is packed with an advanced computer chip for high-quality graphics and a new kind of DVD player. But it will face tough competition from Microsoft Corp.'s Xbox 360 game console, which is already out, and Nintendo Co.'s Wii console, which will be released around the same time.

The release of the PS 3 will be influenced by the releases of Nintendo's Wii, and potentially other new products in the gaming space. Here is the chart for the November contract (July - Dec are listed):







Confessions of a gambling addict

Keith Taylor: ex-gambler and writer. (via Everyday Economist). Here is an excerpt:

I won't take you through all the tawdry details of my addiction, but online gambling cost me around £25,000 ($45,000) over three years. I had to drop out of university for a spell, and by the time I re-enrolled I'd fallen so far behind I had to repeat a year of study. I destroyed friendships. I damaged my relationship with my family almost beyond repair. I forfeited the right to trust and respect. It was only blind luck that I had people around me who still cared enough to bring me back from the edge.

You'd think, then, that I'd support any measures that might save others from going through the same agony. You'd think I'd hate gambling for what it did to me. Well, no. You see, what I learned is that it wasn't gambling that almost ruined me. It wasn't the flashing banner ads that enticed me at every turn on the Internet. It wasn't the temptation of easy money. I don't blame the bookmakers, websites or casinos one bit.

The fact that I gambled was my own fault. I worried obsessively about my life, and the only avenue of escape I could imagine was to gamble. You shouldn't expect solid logic from a compulsive gambler, but in my head I truly expected to win enough money so that I wouldn't need a degree; enough so that I'd never have to work. I wanted to escape from the pressures of university, and the uncertainty of what would come afterwards.

The most maligned athlete in the Pit gets help

And more of it comes from Yankee fans than Red Sox fans.

Better clutch numbers than Papi? Better bang for the buck than Jeter? I did hear about those guys bangin' ...

UPDATE: Yes, we are sure we don't want him!












Latest update on the North Korean Missile Test expiry

While we have successfully used the Department of Defense as an expiry source previously, no confirmation has been forthcoming on this occasion. Consequently, the Contract has remained unexpired.

Should no confirmation be received in accordance with the Contract rules, the Contract will expire at 0 after 31st July 2006. Please refer to the Contract for comprehensive rules.

This strict and correct adherence to the stated Contract rules ensures the integrity of the Exchanges markets, and our members ability to rely on what is written in our rules.

In this situation, however, the specifics of the North Korean Missile Test Contract have created an undesirable scenario in which the Exchange cannot confirm an event which some of our members believe has occurred. This is a very unfortunate position and one that the Exchange genuinely regrets.

Accordingly, the Exchange is taking a number of steps including the following?

1. The Establishment of an Arbitration Settlement Committee in the near future. Additional details to follow

2. Extending the sources for confirmation on similar contracts in future

3. Including a new extra confirmation step on the order ticket for similar contracts in the near future

We apologise for any inconvenience caused. In particular we apologise to those members who interpreted a 'contract intention' without having assimilated the Contract rules before they traded.

The entire statement can be found here. More from this blog and commenters here.

Some good news on the limits of the Gambling Prohibition Act

in today's WSJ (subscription required). Here are two excerpts:

The government won a court order to temporarily shut down BetOnSports.com and other sites, but didn't file charges against any bettors. Instead, it asked BetOnSports to return funds held in their accounts.

The case raises the question: Why hasn't the government pursued U.S. gamblers? They accounted for roughly half of the estimated $12 billion in annual world-wide revenue for offshore casinos last year, according to research firm Christiansen Capital Advisors. Some gamblers are fearful they might soon become entangled in the government's widening probe, but legal analysts say there's no federal law that explicitly bars individuals from placing bets online, and few state laws that do.

For its part, the Justice Department said it is focused on the online gambling businesses, not individuals. "There is certainly not a law that expressly prohibits a bet by a casual bettor," said a Justice Department official in a phone interview. "We think that is more for state law to decide."

and

Legal analysts said it is unlikely federal prosecutors will target individual bettors, in part because the government prefers to leave prosecution of such cases to the states. And, like New York, few states explicitly bar the casual bettor from wagering online. Even in Washington state, which recently made it a felony for a person to gamble online, state officials said it's unlikely they would prosecute casual bettors.

Gambling experts said one of the few reported cases of an American being prosecuted for online gambling involved Jeffrey Trauman, a North Dakota resident. In 2003, Mr. Trauman, a professional bettor, pleaded guilty to a misdemeanor for violating a state law that limited legal gambling to wagers at a tribal casino or sanctioned charity. He received a $500 fine and one-year deferred sentence.

"It is politically difficult or unwise to go after consumers if they're not significant gamblers," said Bill Eadington, a professor of economics who runs a gambling-research institute at the University of Nevada, Reno. "One can make a case that if an individual bettor is moving hundreds of thousands of dollars, he may be a target."

Arresting gamblers would bolster the federal government's efforts to curb the activity, said Lawrence G. Walters, a Florida attorney who represents offshore casinos. However, he said, "there could be Constitutional problems with attempting to regulate a local activity, such as the placement of individual bets by people in their own home."

Of course, congressional restrictions on money exchange between TS and its willing customers is still a problem.

I am removing my link to Raw Story

My good friend in the Pit, sellSELLsell, referred me to this Drudge news alternative, and I thought it would be good for balance on the blog. But the headline "Frist family firm sold for $21.3b" for this story is inaccurate, as HCA is a publicly traded company where 350 of 387 million shares are floated for public ownership.

This blog has a bias, in advocating for more interest and trading liquidity at TS. That is why I hit the Republican party here, where it is acting against the purpose of this blog. In everything else, I hope the blog is accurate and balanced and conflict-free as much as possible.

And sellSELLsell, please continue your valuable input. Perhaps we can find alternatives together to maintain and improve the balance of this site.


UPDATE: Turns out sellSELLsell has a great website, shining a bright light on money for the needy.

How much is Bill Clinton helping Joe Lieberman's chances?

Apparently, not very much:




(Via Drudge)


Jason Ruspini is Paul Revere

when it comes to the Gambling Prohibition Act. An excerpt

Very often, moral concerns have been expressed that gambling is wasteful and diverts people from more productive activities. Alongside this idea, one would formerly hear that gambling instills a poor work ethic, or encourages "idleness", or places too much emphasis on chance over providence. Even here, real interests can be masked. Although the English laws of 1699, 1826 and 1906 were claimed to help the poor, there is reason to suspect that their establishment had more to do with maintaining the status quo and keeping the poor in their place. The higher classes had more to lose, and so had less of a need for variance than the poor. The 1906 law, orginally known as a "class law", was eventually recognized as outdated and unenforceable, and was discarded in 1960 when the Betting and Gambling Act legalized betting shops in the UK.

Read the whole thing. I said something similar, without the benefit of Jason's high intelligence quotient, here.

Hey, we got cited in Economics and Social Policy IV

The Boring Made Dull says "caveatBettor chips in". Thanks!

Slate gives us a backhanded compliment

Wait, there's no compliment at all here. Just shilling for Citibank, I suspect. Maybe the writer of this hatchet piece, Daniel Gross, should read up a bit here first, before shoveling this probable organic source of methane.

If anyone is an amateur in any particular subject matter, it usually is the journalist, especially one who works for the New York Times. (via Instapundit)

UPDATE: While Gross angers TS professionals, Citigroup is upsetting European nations. (via Wall St Folly)

Why Don’t Americans Suck at the Tour de France (but do at World Cup)?

Stephen Dubner's theory is here.

I think whoever cries the most, sucks the most. It was culture shock for me to see so many losers cry in the World Cup. Must have been brainwashed by these types of movies as a kid.

And then there's this guy. Enuff said?