×

Innovative Political Prediction Market Launches Today Website Melds 'Wisdom of Crowds' with 'Skin in the Game'

WASHINGTON, D.C., Oct. 31, 2014 (GLOBE NEWSWIRE) -- The Commodity Futures Trading Commission's Division of Market Oversight has granted no-action relief to a new online real-money prediction market for political and financial events called PredictIt. The market is an academic project under the auspices of Victoria University of Wellington, NZ, an experienced operator of prediction markets, for the benefit of research performed by Victoria and U.S. universities affiliated with the project.

Starting with modest deposits, users can buy and sell 'binary options' around political events. Eighteen months in development, the site is open for traders in most of the country as of 5 p.m. (EST), Friday October 31st.

Prices fluctuate in real-time on propositions such as "Hillary will be the Democrat's Presidential Nominee in 2016", with traders buying or selling contracts based on their assessment of the probabilities. As of 8:00 a.m. this morning, on a staging site, "Hillarys" were trading for $.74 (or 74% likelihood she would be the Democratic nominee) and "Warrens" for $.17 (17% likelihood). For the GOP nod, "Christies" and "Mitts" were tied at $.21, with "Jebs" fetching the highest price in the tight pack at $.25.

Experts say the no-action letter opens the door for Victoria University to offer, on a not-for-profit basis, a market for forecasting political and financial events. Attesting to the popularity of prediction markets, 8,000 New Zealanders have already enrolled in a similar service operated by the University. The Washington-based non-partisan technology company, Aristotle, is providing support such as age and identity verification needed to operate the market in the U.S. Aristotle also is an experienced processor, well-versed in regulatory reporting and compliance, having handled millions of dollars in campaign contributions over the years for hundreds of candidates and political action committees through its service at www.campaigncontribution.com.

The CFTC granted a similar no-action letter to the University of Iowa in 1993, permitting it to operate a non-profit electronic political events prediction market for the purpose of academic research. PredictIt revises, updates and modernizes that type of service to take into account new technologies, so as to enhance even more channels of academic research, and at the same time provide a fun, fluid and exciting interface for participants. As the CFTC noted, "The University's market would vary from the IEM model in certain respects, including a larger allowable number of traders in its market, as well as a higher, inflation adjusted cap on investment by any single market participant." The CFTC also noted that these enhancements would "cause the University's market for event contracts to produce more accurate results, thereby furthering the educational public interest purpose of the project."

Many experts believe that prediction markets are more accurate than traditional public opinion polling because they tap the knowledge of insiders and well-informed members of the public rather than a random group of respondents. With even modest amounts at stake, players are more likely to accurately predict the future when they 'vote with their heads, not with their hearts'. Several leading U.S. universities have already signed on to the project, to analyze the market results for academic research and related educational purposes.

"Prediction markets bring insider knowledge into the public domain," said Victoria University's Geoff Todd. "They provide a real time reflection of the likelihood of an event occurring. When you make a prediction you are assessing what you think everyone else is going to do, not what you will do. This is a very powerful predictor of people-based events."

John Aristotle Phillips, CEO of Aristotle, stated, "Prediction markets are part of the future in politics, media, social science, and finance. The 'game' of politics has all the ingredients to be fun, social and viral. It will impact the way we interact with current events and the news or entertainment content we consume because a well-designed market affords the engagement that well-informed people crave. We are grateful that Victoria University has chosen us to be a part of this project."

About PredictIt

PredictIt is a project of Victoria University, operated with the support of Aristotle International, a U.S. non-partisan political technology company, on a not-for-profit basis. Its purpose is educational. Prediction markets, like this one, are attracting a lot of academic and practical interest. So, you get to play for fun, investing modest amounts in your informed predictions, while helping the experts better understand the wisdom of the crowd.

CONTACT:Brandi Travis (202) 903-4221

Source:Aristotle, Inc.