Intrade is in the public interest

Events like these are the reason I hold my hyperbole back. I would hate to water down genuine outrage when I really need to express it.

Yesterday the U.S. Commodity Futures Trading Commission shut down the prediction market website Intrade by filing a civil complaint in federal district court.

Prediction markets are an innovative way to predict the future by asking what a broad range of people believe, and uses wagers to filter out the people that are merely guessing. There was even talk of establishing a prediction market by the government on future terrorist attacks, but that was shut down for political reasons.

So what great threat did Intrade present to the American public to justify this enforcement? Listen to the CFTC itself:

As a result of reviewing the complete record, the CFTC determined that the contracts involve gaming and are contrary to the public interest...

"Gaming" being a modern euphemism for gambling.

It's tempting to say that Intrade deserved to be shut down for not getting a proper license from the CFTC to operate markets for questions like who will win the presidential election. It turns out that the CFTC won't let anyone do that. A rival prediction market firm, the North American Derivatives Exchange or Nadex, is regulated by the CFTC and sells prediction markets in things like jobless claims numbers but not election results. That's because the feds rejected their request to have markets in political elections back in April. The reason?

The same vague claim of the public interest.

By the way, Nadex is gloating about the enforcement. Their press release is almost honest, as it declared the company "commends the U.S. Commodity Futures Trading Commission (CFTC) for its aggressive action yesterday to protect U.S. traders."

Notice it didn't say that the action protects the public. No, it instead said it protects traders. And since there is only one prediction market company that legally operated under the CFTC, it referred only to Nadex.

Do yourself a favor and take this time to learn more about prediction markets, an important scientific tool worthy of a Nobel Prize that the United States government just declared a criminal act. Whatever happened to the public interest.