Who could have seen this coming?
The Dublin-based online prediction market InTrade announced late Sunday that it was closing down immediately, citing possible financial irregularities. It was an unexpected event—ironically just the kind of thing that sites like InTrade are supposed to foresee.
There is little consensus about whether prediction markets (or futures markets, or bookmakers, which provide much the same function) actually do a good job of predicting the future. And the various markets can vary widely in their predictions, giving rise to lucrative arbitrage opportunities for those who know how to exploit the spreads.
InTrade is down, possibly for good. But alternatives for those interested in placing a wager on the future—or tapping into the collective wisdom of those bets—are proliferating in friendly legal jurisdictions:
Based in Gilbraltar, it is the new favorite of prediction market expert Justin Wolfers of the University of Michigan. He said on Twitter that Betfair has “even deeper markets (though no US traders).”
Sample wager: Front-runners for the 2016 US presidential election.
Based in Ireland, naturally, the company is known for its controversial advertising and politically incorrect predictions, like the possible assassination of President Obama and the date of extinction of the polar bear.
Sample wager: First country to leave the euro
Based in Curaçao, a Dutch island off the coast of Venezuela, Pinnacle is a traditional bookmaker, rather than an exchange that aggregates the opinions of many bettors.
Sample prediction: Frontrunners to be the next pope
Based in New Zealand and co-owned by Victoria University, iPredict was established in 2008 and offers wagers on domestic politics and world affairs.
Sample prediction: Will North Korea violate the border with South Korea in 2013?
Bets of Bitcoin
This new site takes bets in the electronic currency of bitcoins, which could make it more feasible for users in the United States to participate. InTrade closed its site to US bettors in November after it was sued by the Commodity Futures Trading Commission for allegedly violating trading rules. Many wagers on Bets of Bitcoin are centered around the price of bitcoins themselves.
Sample prediction: The movie Oz the Great and Powerful will gross at least $125 million in the US by April 8th, 2013.