By Eric Crampton
I’m a fan of Hanson‘s idea markets. Imitation as flattery: I put together a Marsden grant proposal (New Zealand’s NSF) to start up election stock markets here that would subsequently be expanded into policy and decision markets. Unfortunately, the grant proposal didn’t make it through this time but I’m hoping to improve the draft proposal and send it through again for next year’s funding round. The Commerce folks here ruled that Unlisted, an exchange trading shares in small companies, could operate as an unregistered securities trading facility — essentially, the market was deemed too small to be worth worrying about. Idea markets here could find cover under that ruling.
Given that it’s always been a bit dicey as to whether those markets would count as betting or futures markets, I wonder what this will mean for Hanson markets in the US:
Online gambling just got riskier. House of Representatives lawmakers on July 11 passed antigambling legislation that could make it difficult for U.S. gamblers to carry out transactions online.
If passed, the Internet Gambling Prohibition and Enforcement Act could deal a blow to the online betting industry. It explicitly bans Internet gambling, prohibits online poker sites and other betting companies from “knowingly accepting” money from U.S.-based customers, and encourages financial institutions to deny Internet gambling transactions. It does not affect horse racing.
If this passes the Senate, will it affect trading on Tradesports? They’ve previously sought cover under CFTC as an exempt board of trade; Chris Masse is betting that it won’t have much effect because it won’t add new constraints. I’d thought, though, that part of the bill would work to stop money from going to third party payment systems that dealt with online gambling outfits. At least, that’s what I thought Ebay had in mind when it lobbied for the legislation (recall that Ebay owns PayPal).
If Tradesports were to open book on whether the bill would pass through the Senate, would it be constrained against paying out to successful American-based punters?