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HYPERLINK "http://feeds.feedburner.com/~r/MercurysBlog/~3/323493696/"CFTC & Prediction markets - What I’m sending and what to expect
Posted: 30 Jun 2008 03:08 PM CDT
This will be my last post on the CFTC and prediction markets.
Thank you to those who e-mailed me with comments and left comments on my posts. As I hoped, it helped clarify my own thinking, particularly on how public event markets can and should work. While I still believe that the CFTC should make public, real-money event markets work, the reality that this will need strong regulation from the CFTC is reflected in my draft response. My final draft is attached below, and will be submitted to the CFTC later this week.
What do I expect to happen?
I expect that the CFTC will choose to provide a “safe harbor” for academic, corporate and low-stakes prediction markets. There is very strong (I would venture unanimous) support for this, and it is sorely needed.
I sincerely doubt that the CFTC will take the steps necessary to allow public real-money prediction markets at this point. It is simply a very significant change, and I doubt that it would happen before a major election. That said, I am quite hopeful that the CFTC will sketch out a roadmap as to how this can or should happen in the coming months and years. Knowing that governmental bodies are quite risk-averse, there is really no way that we will go from the current state to a position where real-money prediction markets are completely legal in one stroke of the CFTC’s regulatory pen. But I believe that the current environment is positive for change and that if enough interest is shown in this comment period the right steps will be taken to make “event markets” legal in the United States.
This really will have little to no effect on most corporations and prediction market projects. Companies will be able to run them just as easily in the coming years as they can now. However, once real-money prediction markets are legal, there should be much more familiarity and acceptance of the concept, and thus greater acceptance at the corporate level. When that happens I will be very happy!
HYPERLINK "http://blog.mercury-rac.com/wp-content/uploads/2008/06/cftc-draftresp..."CFTC-DraftResponse.pdf
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