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.