
The Fall of Intrade and the Business of Betting on Real Life (2014) - JacobAldridge
http://www.buzzfeed.com/andrewrice/the-fall-of-intrade-and-the-business-of-betting-on-real-life
======
gefh
It's so sad that intrade got stomped by the Feds while fanduel and draftkings
are advertising on TV. There's a serious social utility in prediction markets,
whereas fantasy sports betting is just another way to separate punters from
their money.

~~~
_delirium
While the feds haven't done anything about them yet, Nevada just started
cracking down on daily fantasy sports:
[http://www.nytimes.com/2015/10/16/sports/gambling-
regulators...](http://www.nytimes.com/2015/10/16/sports/gambling-regulators-
block-daily-fantasy-sites-in-nevada.html)

~~~
avn2109
The NFL's army of lobbyists and attorneys will insure that some form of
legalized digital sports betting is available mostly-nationwide. It might be
called "Fantasy Sports" or it might be called something else, but it will be
widely-advertised and very profitable.

The cat's out of the bag and they'll make sure it's never going back in.

~~~
slg
>The NFL's army of lobbyists and attorneys will insure that some form of
legalized digital sports betting is available mostly-nationwide.

Except if that were true, why wasn't there legal nationwide betting available
before DraftKings and FanDuel? The NFL only cares about gambling to the extent
it can grow interest in the sport, but once it gets too messy they will wipe
their hands of the whole situation. The NFL's lobbyist have more important
things to work on than dying on the hill of legalized sports betting.

~~~
huac
DraftKings and FanDuel paid off top NFL-related personnel, so the interests of
DK/FD align with the NFL's interests. Now, the NFL (or at least influential
executives) will get their cut of the pie, without actually having to bake the
pie themselves. Turns out, asking for permission rather than forgiveness
works.

Though, yes, the NFL's lawyer army will have concussion battles to fight for
the foreseeable future.

------
chollida1
Modelling for the purpose of "betting" is sort of the definition of my day
job. Over the past few years I've started applying some of the same techniques
we use in the equity and bond markets to the fantasy sports arena.

The biggest issues I've come across are:

1) small sample size, football teams only play 16 games which means you really
don't have alot of data to use.

2) counter party risk, lots of fantasy betting sites spring up and then fold,
just like bitcoin. Ideally there would be a new form of prediction market that
hosts bets but has a reliable third party escrow the funds.

3) Not enough volume, this is getting better but only due to Draft Kings huge
advertising push this past year.

4) Lack of apis, most of these sites seem to want to cater to people who make
1 or two bets. Ideally I'd be able to make 1000's of bets each week.

If anyone else out there is working on models for fantasy sports betting
please feel free to drop me a line if you'd like to discuss techniques for
modelling( I believe the cool kids now call this machine learning).

~~~
lordnacho
I've got a friend who used to work in quant hedge funds. He's moved to a
company that exclusively trades sports. There's a lot of interesting alpha in
there, and you don't get the same portfolio effects (market up/down) that you
get in finance.

One thing that juices returns is access. If you know about the new markets
opening you run your arbs on them and make good money.

Hours are weird.

~~~
username223
I can't help but be reminded of that Taibbi quote about Wall Street being a
vampire squid plunging its blood funnel into anything that smells like money.
It's a living, I suppose, but does "running your arbs" create anything of
value?

~~~
alasdair_
>It's a living, I suppose, but does "running your arbs" create anything of
value?

Something similar could be said of the people chasing the ball around the
field.

~~~
samwisethethird
Entertainment has value.

------
phillc73
"Intrade’s system was designed to evoke sophisticated investment, not a casino
or a horse track"

I resent the supposition that there is not sophisticated investments being
made on horse racing.

There are many professional investors all over the world, making sophisticated
investments in horse racing.

One company I'm involved with, essentially a one man band, pays between
£10,000 - £15,000 per annum just to access horse racing data, both daily races
and historic results. They then use this raw data to produce complex ratings
for daily races and to perform historic data analysis. Their toolset is mostly
R and Python based.

This is just one small company in the UK. If you looked at other
jurisdictions, such as Hong Kong, there are multi-million dollar syndicates
crunching numbers to make sophisticated horse racing investments.

~~~
jameshart
No matter how you dress it up, betting on an outcome is not an investment, it
is playing a game. You can invest in applying sophisticated tactics to a game
to swing the odds in your favor (look at a formula 1 or NFL team for an
example of this taken to extreme), but you are still playing.

~~~
phillc73
To pull another quote out of the article:

“Lots of ordinary financial things are gambling,” says Robin Hanson, an
economist at George Mason University. “But they are carved out in the public
mind.”

Life is playing. Everything you do is an investment of some type - time,
energy, emotion, money. Every decision you make is "betting" of a kind, it
just depends how you decide to dress it up.

~~~
gojomo
One important missing dimension-of-distinction here is 'zero-sum'/'negative-
sum' vs. 'possibly-positive-sum'.

The lines can seem fuzzy in practice, but it does make good sense to reserve
the term 'investment' for deploying resources, with the hope of gain, in
domains where a net-positive-sum outcome for all is possible.

Meanwhile, pure 'gambling' reshuffles value in a net-zero-sum or even net-
negative-sum process, and in many cases only persists because some
participants ('suckers', 'marks', 'degenerates') have equally-persistent
behavioral/decision-making problems.

Another related dimension-of-distinction is whether the randomness is an
inherent product of a chaotic/complex/natural process, or synthesized
precisely with intent to confuse.

Coming to understand (and either control or hedge) the randomness in nature or
in complex hard-to-predict systems can be a very positive-sum process, and
even generate spillover benefits for others (positive externalities). But
engineering a game with fixed completely-deterministic odds, rigged against
most players and (designed-to-be) just beyond the ability of their usual
rules-of-thumb to model, is essentially predatory.

People generally shouldn't play such games, or confuse them with the other
more-reasoned 'bets' made in other domains. Of course people will sometimes
make the 'bad' bets, because they're not always easy to distinguish and
everyone has to learn. But the end of that process would ideally be to better
discriminate between kinds-of-bets, _not_ to lump them together as 'all just
gambling'.

------
SilasX
>Intrade’s system was designed to evoke sophisticated investment

No, it wasn't, or it failed at that:

1) They changed rules on bets midstream. I lost when they redefined the swine
flu count as "the CDC's current total" rather than the original specification
"number of cases as estimated by major media sources". (The CDC stopped
updating.)

2) The bizarre $1 = 10% chance system. (Bet contracts would be set to have a
value of $10 each, so a 100% chance should equate to a ~$10 bid.)

3) The flaky, designed-to-trick-you withdrawl system. When I asked for a check
for my balance, there as a $X fee. So I asked for $Y, while leaving $X in the
account, and was told I'd get $Y. Then they took $X out _of the check_ ,
leaving an $X balance.

------
lucio
> “The idea of a federal betting parlor on atrocities and terrorism is
> ridiculous and it’s grotesque,” said Sen. Ron Wyden, a Democrat from Oregon.
> The head of DARPA, Adm. John Poindexter, was forced to resign and the
> project was squelched.

How idiotic. It sound like a very good idea. Anyone with "insider knowledge"
but no participation of a terrorist attack, will be very tempted to place a
bet. By checking the bets you can avoid attacks. Create such a market using
bitcoins, and you'll get very valuable intel. It's like having ears
everywhere.

~~~
joosters
Anyone with insider knowledge of a forthcoming terrorist attack should be
telling the police, not placing a bet to make themselves money.

~~~
Moshe_Silnorin
If your utopia is powered by virtue, prepare for bitter disappointments. If
your utopia is powered by vice, prepare for happy surprises.

------
jeffdavis
"The idea that the expert human mind could be outclassed by a bunch of
amateurs getting together is very disturbing, as disturbing as saying the
Earth is not the center of the solar system."

The article doesn't quite make the case that that is true.

Crowds predicting an election is no surprise -- crowds determine the outcome.
It would be more compelling if the results were accurate a year ahead of time
or something.

And for sports betting, the average betting amateur is actually quite well-
informed.

I don't think this really applies to science very well. Crowds change opinions
all the time, so they can't be right about some unchanging law of nature.

------
claywm
Take note, daily fantasy sports sites:

> “We’ve learned from our own experience,” [Intrade founder Ron Bernstein]
> replied, “that regulatory avoidance isn’t a good business model.”

~~~
otoburb
A couple of decentralized prediction markets[1][2] powered by blockchain
technology are trying to move regulatory compliance from centralized betting
exchanges to the users themselves, which could be construed as an attempt to
minimize regulatory liability, similar to DMCA Safe Harbor provisions.

[1] [http://www.truthcoin.info/](http://www.truthcoin.info/)

[2] [http://www.augur.net/](http://www.augur.net/)

~~~
joosters
I wonder how these companies/groups will prevent minors from betting? Even
countries where gambling is fully legal frown upon underage gambling. I think
these startups are not going to be able to dodge all the regulatory problems
by pushing the betting onto a blockchain.

~~~
aianus
They _aren 't_ startups, not any more than "Bitcoin" or "Bittorrent" are
startups.

Once the software is initially developed and released, there's no head to cut
off or assets to seize, there's just a million little pseudo-anonymous players
scattered all over the world.

~~~
joosters
Augur raised millions of dollars through crowd funding. There's definitely a
central organisation there.

~~~
aianus
Seizing the money raised in the distribution of the reputation isn't going to
shut down Augur any more than seizing Satoshi's house and putting him in
prison would shut down Bitcoin. At a certain point (Augur and Ethereum aren't
there yet) it just takes on a life of its own beyond its creators.

I mean, Bittorrent ostensibly had a "central organization" at one point but
there's nothing you could do to it that would shut down the protocol.

~~~
joosters
I take your point, and I don't expect any legal action against Augur until
(if?) it grows big, by which time it will have less of an obvious core. But
there will still be identifiable promoters, e.g. anyone hosting a website
advertising/facilitating Augur. I'd guess that these people would be the ones
at risk, rather than the individual bettors.

Anyway, I'm watching its development with interest, but I suspect that it
won't become a big success.

------
ryanelfman
I've been creating a platform for some time now that is similar except it has
to do with trading future revenue streams. Check it out
[http://www.gimmeview.com](http://www.gimmeview.com)

------
tunesmith
Random product idea: An app where people can place bets on outcomes in their
own personal lives by assigning percentage certainty. _And_ where the app will
let them make bets on future public events the same way, events that are fed
via a service and where the bets are stored centrally. The bets wouldn't be
for money, they'd instead be for the credibility of who could be most "well-
calibrated" via a "proper scoring rule" that would penalize you for inaccuracy
_or_ ignorance - so you have incentive to be knowledgeable about the event,
and accurate about the odds. Soon you'd have a leaderboard of people who were
best able to tell the future, and you could design future features from there.

But the MVP is pretty simple. Create an event, create a bet, create a
leaderboard.

