17
May
08

Prediction Markets

Prediction Markets are the new thing for money makers. You get paid for correctly predicting worldly events before the happen; what could be easier? For example, if you are just so confident that God forsaken Hillary Clinton is going to win the Presidential nomination (not the race mind you, just the nomination) then you could buy a contract for 5 (at the time of the article), or as it translates, 50 cents. When the time comes and the nomination is actually revealed, if you are right the contract pays 100, or 10 dollars. See how it works? So basically the going rate for a contract is the markets aggregate prediction of the probability that a certain event will occur- in this case 5% chance that Hillary Clinton will get the nomination.

You can bet on anything from Presidential races to Olympic city bids for 2016 to whether or not Elliot Spitzer will get indicted on felony charges before a certain date. I think this is a great way to make money especially if you’re an insider at one of these places. I’m assuming that insider trading laws from Sherman don’t apply to this sort of thing. If you’re with team Obama and he dies- go bet the farm before the news breaks. Whether or not that’s ethical is arguable but take it for what its worth. Not only is it a good way to make money, its a really interesting way to waste time.
Intrade.com is the prime example of such a market- real money traded here… be careful!


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