The political betting market may be no better than fantasy sports betting

Do you remember Intrade? It was an online political prediction betting site founded by Ron Bernstein shortly before the 2000 election. They had a long run, with plenty of polticos not only using the site to gamble, but taking the trending leaders on the boards as portents of the future which were widely reported on cable news outlets. They eventually were forced out of business a few years back, but since that time the service had been replaced by others such as PredictIt.

Before you go rushing out to place some of your hard earned cash there you might want to take a look at the latest news regarding sites such as these. Much like Wall Street, there’s always somebody looking for an edge when there’s money to be made and insider trading is no longer restricted to the floor of the New York Stock Exchange. (Time)

Welcome to the new American campaign casino. For the first time in modern history, the average citizen 18 years or older can legally place real-money wagers on politics, in a marketplace approved by federal regulators. The new market for political betting, coupled with the explosion of the multi-billion dollar fantasy-sports industry that was roiled by scandal this week, has raised questions about the spread of online betting markets that have few rules to prevent forms of insider trading.

Like Miller, many of the top speculators on PredictIt are political junkies who win money with a mix of savvy and speed. But PredictIt also allows for those with inside knowledge of future political events—campaign pros, candidate aides or pollsters—to profit as well. “The risk is that a bunch of people figure they’re not one of the insiders, so they take their ball and go home,” says investor Barry Ritholtz, a critic of prediction markets.

How does one stop insider trading? It’s notoriously hard to root out in the stock market and more than a few people have speculated that it still goes on, though perhaps at reduced rates. (Or people have simply gotten better at it.) And that’s in one of the most regulated places in the country. Inside of an outfit like a privately run, political guessing game it should have been completely predictable. Does that mean you shouldn’t play? Well… that’s up to you, but if nothing else you should go into it knowing that if you aren’t one of the real insiders who find out juicy tidbits from the American Game of Thrones before the media gets hold of it you’re probably never going to do as well as the big boys.

But online gaming of any kind is always fraught with peril since you generally can’t see what’s going on behind the curtains. There were rampant rumors that Pokerstars and other web based gaming sites were scamming the players. (Though that never stopped me from playing. Hey… somebody has to win.) Just this week the fantasy sports betting world was rocked with allegations that people inside the sports media were putting up ringers because they had information about injuries, trades, suspensions and related data a few minutes before the rest of the fan world found out. The owners of the sites are denying it all, of course, but there’s obviously reason for suspicion.

In the end I guess it’s a case of caveat emptor, or perhaps the wise words of Lazarus Long. Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win.