Banned in the USA

So long, Intrade. Sorry that you were put out of business for the most ridiculous of reasons:

Today, Americans were told that they must close their Intrade.com accounts. That happened because the federal government agency known as the “Commodity Futures Trading Commission” (CFTC) today sued the prediction market, where people from all over the world bet about things like who will win elections.

Why did the American government sue Intrade? It was not for operating an online gambling operation, but for allegedly violating America’s incomprehensible financial regulations – specifically, these ones:

“Section 4c(b) and 9(a)(3) of the [Commodity Exchange] Act, §§6c(b) and 13(a)(3) (2006); Section 2(e) of the Act, as amended by the Dodd-Frank Act, to be codified at 7 U.S.C. § 2(e); and Regulation 32, as amended, to be codified at 17 C.F.R. § 32 (2011);”

In English: the government says that many of the things Intrade allows people to predict – everything from what the price of gold will be in the future to whether the U.S. will go to war soon – are legally considered “commodity options,” and that Intrade broke the law because it isn’t licensed to trade those. The penalty is $140,000 per violation.

More here. The Springsteen lyrics are apt.

And people still have the nerve to claim that government has the capacity to leave well enough alone.

  1. Bryan G. Stephens

    It is what the nation wants.

  2. ConservativeWanderer
    Paul Wilson: Business Week has more on the story. Apparently, the original charges date from 2005, well before Dodd-Frank. · 0 minutes ago

    The financial laws in this nation are so Byzantine it could have started as a violation of one law and ended up being a violation of both.

    Remember, Democrats don’t believe in the rule of law, they believe in the law of rules… meaning it doesn’t matter to them if the regulation in question wasn’t in effect at the time of the alleged violation, business is bad and needs to be punished regardless.

    It may be uncomfortable, but having these laws fall on companies that Democrats like is probably the only — slim — chance we have of teaching them the evils of overregulation.

  3. BrentB67

    I don’t think the CFTC is out of line. InTrade can take wagers on Academy awards, elections, or other things, but trading derivatives based on U.S. commodities and financial instrucments comes under the jurisdiction of the CFTC. The CFTC has done this for 40 some years, this isn’t new to anyone including InTrade.

    The CFTC didn’t shut down InTrade, the CFTC just brought a civil action against them. If InTrade thinks they are within their rights to trade commodity derivatives, fight it.

  4. Edward Smith

    Well, yes, voters are more influenced by Polls & Intrade than horses in the race by the track announcer.

    But I would just as soon see candidates who know how to keep the voters interested in seeing them win (and deal with Voter Fraud) than go after the Pollsters & Intrade.  Doing that ignores the real problem Romney had.

    ConservativeWanderer

    KarlUB: While I disapprove of Floppy’s tone– which is not generally how we talk to people around here– I do echo his inquiry.

    Aside from the fact that this company’s prediction market was correct in a way that bummed us all out, why are you happy to see it crushed by the State, Conservative Wanderer?

    Is it because you feel their markets can be too easily manipulated, and hence affect outcomes as much as they predict them? · 0 minutes ago

    See #11 in reply to my friend Edwards above.

    And yes, I also feel that Intrade was easily manipulated. In fact, the endless “Obama is winning on Intrade” may have caused some Romney voters to sit at home. I’ve been arguing that being perceived as a winner matters in elections for quite some time. · 9 minutes ago

  5. ConservativeWanderer
    Edward Smith: Well, yes, voters are more influenced by Polls & Intrade than horses in the race by the track announcer.

    But I would just as soon see candidates who know how to keep the voters interested in seeing them win (and deal with Voter Fraud) than go after the Pollsters & Intrade.  Doing that ignores the real problem Romney had.

    ConservativeWanderer

    See #11 in reply to my friend Edwards above.

    And yes, I also feel that Intrade was easily manipulated. In fact, the endless “Obama is winning on Intrade” may have caused some Romney voters to sit at home. I’ve been arguing that being perceived as a winner matters in elections for quite some time. · 9 minutes ago

    1 minute ago

    Why not deal with all of these problems, rather than picking and choosing?

  6. Fake John Galt

    No they are withdrawing this product from the US market. It is pretty much another case of business being ran out of the US because of its regulatory environment.

  7. Pejman Yousefzadeh
    C

    Alas not.

    Paul Wilson: Sigh. The dead hand of government strikes again. I take it this is not an “Onion” story. · 29 minutes ago

  8. FloppyDisk90
    ConservativeWanderer

    Why not deal with all of these problems, rather than picking and choosing? · 31 minutes ago

    Because pollsters and Intrade are not a “problem.”  They both provide information at the behest of freely operating markets. As best I can tell from your posts above you think it’s OK to shut Intrade down (or bring suite against them, I don’t know all the details) because you hope it will teach leftists a lesson.  By that logic we should let Obamacare mandate to Catholic charities and hospitals to provide abortion on demand since that would hopefully teach the many leftist Catholics a valuable lesson, correct?

  9. Fake John Galt

    @conservativewanderer #26: I disagree, they are withdrawing from the market because there is no ROI in fighting the government. It does not mean that they think they are wrong. I work in the IT industry, and have seen lots of money spent on “legal opinions” so that the products brought to market respect all the rules, regulations and copyrights. But any lawyer can tell you that it really doesn’t matter. The government makes the law, interprets the law, rules on the law and enforces the law. If it comes to a dispute the government has more resources to fight with and your lawyers will only defend you and their “legal opinions” till your last dollar. When it comes to a dispute with the government your choices are to find a different part of the government to fight for you, negotiate and pay fines, or fold. They chose fold.

  10. Mendel
    ConservativeWanderer

    KarlUB:

    And yes, I also feel that Intrade was easily manipulated. In fact, the endless “Obama is winning on Intrade” may have caused some Romney voters to sit at home. I’ve been arguing that being perceived as a winner matters in elections for quite some time.

    This may be reason to dislike Intrade – although I have not heard of any actual evidence of manipulation – but this should never be a reason to cheer a private company being run out of business by government regulation.

    Nate Silver played a much bigger role in shaping expectations than InTrade, but I shudder to imagine him being shut up by an act of Congress.

    ConservativeWanderer

    Perhaps this will wake up all the Democrats who love to talk up Intrade as the most wonderful thing since socialized medicine that there are real-world consequences to their legislation.

    Since when has InTrade been a darling of the left?  Most of the praise I have heard of betting markets as prediction tools have come from free market conservatives – including Ricochet’s own Tim Groseclose.  Democrats only like InTrade when it predicts they will win.

  11. Mendel
    BrentB67: I don’t think the CFTC is out of line. InTrade can take wagers on Academy awards, elections, or other things, but trading derivatives based on U.S. commodities and financial instrucments comes under the jurisdiction of the CFTC. The CFTC has done this for 40 some years, this isn’t new to anyone including InTrade.

    What is the substntial difference between an InTrade prediction contract and a credit default swap?

  12. ConservativeWanderer
    Mendel

    ConservativeWanderer

    And yes, I also feel that Intrade was easily manipulated. In fact, the endless “Obama is winning on Intrade” may have caused some Romney voters to sit at home. I’ve been arguing that being perceived as a winner matters in elections for quite some time.

    This may be reason to dislike Intrade – although I have not heard of any actual evidence of manipulation – but this should never be a reason to cheer a private company being run out of business by government regulation.

     · 2 minutes ago

    This is what the left calls a “teaching moment.”

    But first, as for Democrats and Intrade, well… Ezra Klein pretty much admitted to being willing to game the system if he was running a campaign.

    And just look at all the DemocraticUnderground threads about Intrade.

    Now, clearly, they loved Intrade in this election cycle. Therefore, seeing one of their own darlings undone by one of their own laws is… schadenfreude on steroids.

  13. ConservativeWanderer

    One more point.

    Regardless of how needlessly byzantine the finance laws are — and I’ve said that they are absurdly confusing before — it is still nonetheless the responsibility (personal responsibility, a conservative concept) of the business owner(s) to either understand the laws themselves or hire people that do, and to keep the business on the right side of the laws.

    Intrade obviously didn’t. As has been pointed out earlier on this thread, they’re not even putting up a fight, so apparently they know that they have no defense, they really were in violation of the law.

    Therefore, for not doing their due diligence as a company, they deserve to fail, and they have.

  14. FloppyDisk90
    ConservativeWanderer: One more point.

    Regardless of how needlessly byzantine the finance laws are — and I’ve said that they are absurdly confusing before — it is still nonetheless the responsibility (personal responsibility, a conservative concept) of the business owner(s) to either understand the laws themselves or hire people that do, and to keep the business on the right side of the laws.

    Intrade obviously didn’t. As has been pointed out earlier on this thread, they’re not even putting up a fight, so apparently they know that they have no defense, they really were in violation of the law.

    Therefore, for not doing their due diligence as a company, they deserve to fail, and they have. · 1 hour ago

    I think we need to get our facts straight:  http://www.intrade.com/v4/home/

  15. Instugator

    I don’t understand how it can be a commodity market if no commodities are ever delivered, ever.

  16. Salamandyr

    So, is it just me, or does it seem the Federal Government has a big hat with a bunch of company names on slips of paper inside it.  Each week they draw a name to play “who will we destroy this week?”

  17. Mothership_Greg

    Sounds like another regulatory speed trap has been sprung.

  18. FloppyDisk90

    I encourage everybody to actually go to Intrade and read their banner news.  It would appear that they are in fact not being run out of business.

  19. ConservativeWanderer

    I’m not sorry to see it go.

  20. Edward Smith

    Why?  I didn’t follow Intrade that much.  PM me the answer if you want to.

    ConservativeWanderer: I’m not sorry to see it go. · 1 minute ago

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