Friday, December 29, 2006

Sports vs. Non-Sports Divestiture

I don't really like this development, because it appears to bifurcate capital and traders into separate, smaller universes at any given instance of time.

However, it makes sense to me, in that the sports side of things is at greater legal risk than the non-sports prediction markets. The conspiracy theorist in me thinks we've got the casino, horse racing, and state lottery interests trying to shutdown the sports trading.

I think that the sports contracts may not create the economic value that the non-sports contracts do. However, traders can hone their execution and risk management skills trading the sports, and bring this expertise to the non-sports, thereby improving the predictive power of the information markets.

Your comments, please!

UPDATE: My good friend in the Pit, Todd73NJ, has asked some really good questions and received good answers.

UPDATE: Cross-posted on Midas Oracle.

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