General Betting
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Intrade, the Dublin based "prediction market", has ceased operations and frozen customer funds, pending a investigation into alleged "financial irregularities". The announcement was made over the weekend just a few weeks after the company was reassuring punters it was still a going concern and had exciting expansion plans .It is tempting to say this was all, well, predictable, given the US federal lawsuit the company faced for allegedly allowing US customer to bet on commodity prices. At the time the lawsuit was filed I made the decision to withdraw a substantial six figure US dollar sum and expected to see a similar rush to the exit by fellow intraders.
Much to my surprise, liquidity returned to some of their main markets and I was beginning to wonder if I had overreacted and should dip my toe back into their markets. For once, thank goodness, my instincts were correct - and my heart goes out to those who chose to keep their money on the exchange. I hope now the the financial authorities in Dublin act swiftly to establish the facts and freeze any assets of those associated with the company, not least because the whole episode yet again undermines their attempts to restore credibility to the country's reputation as a safe place to do business. They may also want to look how they can strengthen the law around segregated or "ringfenced" clients funds - a protection which has proved about as useful as a chocolate fireguard (see Worldspreads/MF Global). One of the beneficiaries of all this of course will be Betfair which will face even less competition. Intrade monthly subscription model of just $5 per month with no further commission made it a trader's dream while it lasted. Unfortunately it has turned out to be too good to be true. Pity
Much to my surprise, liquidity returned to some of their main markets and I was beginning to wonder if I had overreacted and should dip my toe back into their markets. For once, thank goodness, my instincts were correct - and my heart goes out to those who chose to keep their money on the exchange. I hope now the the financial authorities in Dublin act swiftly to establish the facts and freeze any assets of those associated with the company, not least because the whole episode yet again undermines their attempts to restore credibility to the country's reputation as a safe place to do business. They may also want to look how they can strengthen the law around segregated or "ringfenced" clients funds - a protection which has proved about as useful as a chocolate fireguard (see Worldspreads/MF Global). One of the beneficiaries of all this of course will be Betfair which will face even less competition. Intrade monthly subscription model of just $5 per month with no further commission made it a trader's dream while it lasted. Unfortunately it has turned out to be too good to be true. Pity
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To Our Customers:
With sincere regret we must inform you that due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com. These circumstances require immediate further investigation, and may include financial irregularities which in accordance with Irish law oblige the directors to take the following actions: Cease exchange trading on the website immediately. Settle all open positions and calculate the settled account value of all Member accounts immediately. Cease all banking transactions for all existing Company accounts immediately. During the upcoming weeks, we will investigate these circumstances further and determine the necessary course of action. To mitigate any further risk to members’ accounts, we have closed and settled all open contracts at fair market value as of the close of business on March 10, 2013, in accordance with the Terms and Conditions of our customers’ use of the website. You may view your account details and settled account balances by logging into the website. At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded. The Company will continue the maintenance and technology operations of the exchange system so that all information is preserved properly. We are not able to provide telephone support or live help services at this time, please contact the company by email at: accountservices@intrade.com We appreciate your custom and support over the years. We are committed to reporting faithfully the status of things as they are clarified and hope you will bear with us as we do all we can to resume operations as promptly as possible. Sincerely, The Board of Directors of Intrade the Prediction Market Limited  |
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This all looks decidedly ominous for account holders, particularly as the company itself makes reference to "financial irregularities", has frozen customer funds and ceased any telephone support. So far, the reaction in the US at least has been strangely sympathetic to the company but I wonder how long it will take to dawn what has actually happened here. In the States, Intrade was widely cited in the media as a wondrous example of the wisdom of the crowds harnessed by the web. Turns out, the only crowd wisdom in evidence were the people who pulled their cash out or steered clear in the first place. Truth is, Intrade had simply become a platform for mug punters getting picked off by arbitrageurs and those with inside knowledge. Its prices were cited by even the most respected media outlets as being uncannily accurate, but in reality the markets with any liquidity simply tracked prices on UK spreadbetting or exchange platforms. Where there was no corresponding market to be arbed, invariably there was little liquidity or volume and the prices were meaningless. The company says it is "sincere" in its regret at what's happened. Let's hope the Dublin cops are equally sincere in their attempts to help customers get their money back. But don't hold your breath
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I placed some money in there for last years US election. The price on the democrats was significantly better than on here just as it had been 4 years prior to that and my reason to use them was influenced by the sequential aspects of the premium charge. There's only so much I will risk on a straight bet on here because of that. Above a certain level I'll always look to use another source, even if the price is slightly worse. For me, I never considered it as an arbing opportunity as always felt there was a small but realistic chance I wouldn't get paid, even though I took advice before depositing from a betting colleague who I'd knew had used them in the past. I accepted there were valid reasons for the price differentials but I personally couldn't see how the $5 a month fee was viable and the instant the bet was settled I withdrew the cash.
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Never used them, but not because I thought that they were shady. I hated the way they organised everything as if they were financials rather than simple betting. That and the monthly fee seemed likely to put off any casual bettor.
The financial irregularity part is definitely the worst bit here. Doesn't sound like everyone will be getting their money back... |
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Intrade did a lot of shady things. This is not unexpected.
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http://dealbook.nytimes.com/2013/03/11/online-betting-site-intrade-halts-operations/
...'Poorly-documented' $1.5 million payments to the founder of Intrade... Definitely not looking good for anyone with money in an Intrade account. |