Federal Government Shuts Down Intrade For Americans

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Intrade, for the uninitiated, is a popular predictions market based in Ireland. It allows people to buy and sell prediction contracts for certain events, such as who will win an election. It’s a little bit like gambling, but Intrade also posts market tickers showing movement in contract buying and selling that can often result in very accurate predictions in outcomes.

Unfortunately, Americans will no longer be able to get in on the fun, because the federal government has found yet another way to protect us from ourselves:

It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations.”

At Reason, Brian Doherty notes that the feds haven’t actually produced any evidence that anyone was defrauded by Intrade.

The move does paint the absurdity of government “consumer protection” in this digital age. If Intrade were defrauding its customers they’d quickly go out of business, because it would be very easy for internet customers to determine that Intrade is fraudulent. As Bryan Caplan points out, consumers on the internet seem to do just fine on sites like eBay and Craigslist with little need for government consumer protection. Are their fraudsters out there? Of course. Should buyers and sellers alike operate with caution? Absolutely. In free markets, caveat emptor is an important concept.

But markets are generally self-governing, even more so when we’re talking about the internet where it’s easy for anyone to make their experiences with a particular company or individual very, very public.

It often seems that our government is more concerned with requiring permission slips and homage from companies than actually protecting consumers.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • http://randysroundtable.blogspot.com/ Randy G

    We will soon have to ask permission from the government to view your blog…

    • Snarkie

      It might make sense to tax you for reading the blog since it obviously makes you more stupid and that, in the long run, has it’s social costs.

  • matthew_bosch

    Through the guise of “safety” and “protection” tyranny grows stronger.

  • Lynn Bergman

    I agree only to a point. TVIX was introduced by Credit Suisse on the AMEX as a legitimate fund… but in the fine print Credit Suisse revealed its likelyhood to fall to zero value. They are being sued. A good friend of mine lost $150,000 and can only hope to retrieve 2/3 or $100,000 in any settlement from Credit Suisse. This kind of fraud is why we need SOME regulation.

  • John Wayne -American

    What happened? is there a big run up on bids that Rice would fail any attempt to become the next SoS? or that the Budget talks are already doomed by Dems who can’t cut anything? Or maybe there was a run on the thought that the fed is ’bout to print another million gallons or so of soy ink onto paper that isn’t worth the price of the ink?

    Yep betting against the ‘One” will probably get ya shut down.

  • jimmypop

    but the chicago climate exchange was fine…….

  • WOOF

    There’s not a lot of investor protection on the Chicago Mercantile Exchange.
    They may be crooks and market manipulators,
    but they’re our crooks and market manipulators.

  • Snarkie

    Markets are not ‘generally self regulating’ nor do they ‘equalize’ or ‘properly distribute’ anything. This much was known, with an empirical basis, long ago. The only nay-sayers are ideologues and people who benefit from lying about the behavior of ‘markets.’

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