Today is not a big day for business news given the election. But one entrepreneurial innovation that people will be watching closely are the online prediction markets. In 2004, when the polls were pointing toward Kerry, the futures markets correctly predicted that Bush would come out on top. The best-known online prediction market, Intrade, is currently trading an Obama victory at high prices. Right now might be a good time to check out how other Senate and House races are trading, and then tomorrow we'll know just how on the mark the consensus opinion among traders on Intrade was.
Businesspundit has an intriguing interview up with Intrade VP for Business Development Chad Rigetti. The site was founded in 2001, and acquired by Dublin-based Tradesports in 2003. Intrade focuses on all events not sports-related--you can bet on everything from the weather to the future value of works of fine art. After the jump--how much can you benefit from starting your own prediction market site?
Rigetti explains in the interview just how much success the site has had:
The volumes in terms the number of lots or the number of dollars that are traded on our exchange are, by traditional financial exchange standards–like the New York stock exchange or the Irish stock exchange in Dublin–small.
However, by most other measures, we’re pretty big. In the past 30 days about $26M have traded hands on the exchange. That’s not small, and there certainly is an opportunity for people to support themselves.
It’s not as mature as traditional markets, but there is a huge opportunity for people who want to do that on our markets to make money and to improve the efficiency and liquidity of our market place and therefore the quality and predictability of the information we generate.
The profile of these kind of sites has grown immensely over this decade, and this election might raise it even further. Now might be the time to look at untapped areas where people are willing to put their money down about the future .