WSX06 a loser

Chris F. Masse .COM takes me to task in an extended comment on my post about the WSX advisory board. In an extended conversation I like to qualify all statements, then qualify my qualifications, driving my partner crazy. I leave most of that out when writing. Equivocation follows. Masse commented:

As for Cass Sunstein, he is a law professor, not an economist —just a detail missing in your upbeat piece. And in his blog entries that you so eagerly point to, he didn’t seem to show any real mastering of the topic. (Cass Sunstein being a friend of your friend Lawrence Lessig, I guess that’s what explains you lack of critical reasoning here —you spare it for your blog entries on Bush #43 and the U.S. military.)

I can only cite economists? You’re correct that Sunstein’s posts this summer at best demonstate that he’s coming from a completely different world. If I recall they prompted lots of virtual head scratching in comments. I expect to have many critical comments about his forthcoming book. For the record I loathe protectionist whiner , another past Lessig guest blogger.

What makes you think that the play-money WSX is going to surpass the long-established TradeSports/InTrade U.S. political prediction markets!????

(You said “could”, OK. Your mother didn’t raise any risk-taking fool.)

Actually my equivocation went much further than “could” — “If the Washington Stock Exchange advisory board is any indication, WSX could displace IEM and Tradesports as the source for quotable market odds for the 2006 US elections. The AB may mean nothing…”

I didn’t spell it out, but I think at best WSX could become the preferred market for the media to quote. As a play-money market it is only a very indirect theat to TradeSports. Still, my post was too uncritical. Thanks for calling me on it.

By the way, Masse now has an RSS feed which I highly recommend subscribing to if you’re interested in the latest news and opinion on prediction markets, along with the occasional rant in the form of a deeply bulleted list. Unfortunately only the last have permalinks.

8 Responses

  1. Hello Mike Linksvayer,

    1. Thanks for the follow-up.

    2. You’re right for my RSS feed and the permalinks. I need to think this through. (I’m a slow learner.)

    3. You’re saying that you “think at best WSX could become the preferred market for the media to quote”. Can I ask you respectfully what kind of herb you’re smoking over there at San Francisco? Seems of superior quality.

    When it comes to political predictions, the U.S. media will preferably quote TradeSports/InTrade in 2006, 2008, 2010, 2012, 2014, 2016, 2018, 2020, 2022, 2024, 2026, etc.

    For papal predictions, the U.S. media will preferably quote Paddy Power (an Irish bookmaker). And for Nobel predictions, they will preferably quote CentreBet (an Australian bookmaker).

    The reason for that has to do with marketing. Each of these three organizations launches their lines of betting/speculating well ahead of their competitors. Each of them thus appears to be ‘the’ specialist of the topic in question.

    Journalists are sheep, but that’s another discussion.

    Best regards,

    Chris. F. Masse

  2. Perhaps you misunderstand “at best”–I mean that is the most they can hope for.

    WSX may be unlikely to dethrone TradeSports, but your claim that the latter will be preferred through 2026 and beyond is bizarre. Surely this is a young and volatile industry. TradeSports is likely to be completely forgotten 20 years from now. TS/InTrade is Lycos, at best. Waiting for the InfoSeek, Excite, AltaVista, Inktomi, and Google of PMs.

  3. There’s a big difference between the dotcoms you list and the exchanges (eBay and TradeSports/Intrade).

    If you’re a very smart technologist and an ingenious marketer, you can start up something that may take over Google.

    However, even if you a very smart technologist and an ingenious marketer, creating a brand-new exchange is extremely difficult because all the new traders attracted by the game will be directed towards the most liquid, established exchange …like metallic pins on a giant magnet.

    Hey, man, sounds like a good bet to put up at Or to float at TradeSports/InTrade.

    My claim is that, in ten years, TradeSports/InTrade will still be the leader of the event-driven futures exchanges —when it comes to revenue coming from American pockets.

    Think of TradeSports/InTrade (or BetFair, or HedgeStreet) as the eBay of bets.

    (The fact that I cite THREE exchanges does not diminish my point. The shape of the field is due to regulation constraints.)

    By the way, is this URL satisfy your permanlink needs?

    Best regards,

    Chris. F. Masse

  4. I figured you’d cite eBay. The web search engine market isn’t a precise analogy, but it’s very well known. I don’t know that TradeSports et al are exchanges in the sense that eBay is. eBay is a complete marketplace, where the products available are determined entirely by the participants and there are zillions of products, making aggregation incredibly valuable. The products (contracts) traded on a PM are relatively homogenous and controlled by the PM. (I know almost nothing of person to person bet-on-anything sites, though I think TradeSports is not one of them.) I suspect commodity markets may be a better model for the competitive structure of PMs, but I sadly know next to nothing about the structure of commodity markets.

    The permalink problem can’t be solved only by your feed. Your news and opinion entries need individual permalinks. Something like would do, where “foo” would be an internal anchor that points to a specific entry in your archive.

  5. “My claim is that, in ten years, TradeSports/InTrade will still be the leader of the event-driven futures exchanges —when it comes to revenue coming from American pockets.”

    Interesting claim. Is the data needed to judge–revenue from US customers–available?

    By the way, even if prediction exchanges have natural monopolies in different sorts of contracts, they’re still subject to mergers and acquisitions, as well as stupid business moves and legal problems that create openings for upstarts that shouldn’t exist. Ten years is a long time. I’d take the “no” side of your claim.

  6. Hello Mike Linksvayer,

    1. Thanks for the permalink suggestion. (I move the items in the archive zone after two weeks, which would wreck the absolute links. Let me find out about relative links.)

    2. I’ll tell you a little secret: “peer-to-peer betting exchanges” (like BetFair and Betdaq) and “event-driven futures exchanges” (like HedgeStreet and TradeSports/InTrade) are two terms that designate the same McCoy. The last term is just more PC in the American media.

    3. You say that traders at eBay put up their own wares —worn down industrialized objects. I say that at the betting exchanges (a.k.a. event-driven futures exchanges, or more simply, prediction exchanges) each traders put up bets of their own for trade —the exchanges just create the supports (the contracts) and execute the trading. As bets don’t wear down, secondary (‘used’) bets are exchanged in the same marketplace that primary (‘newly created’) bets. Ebay and TradeSports/InTrade are both exchanges, but eBay is an exchange for secondary goods —mostly, I know that you can also buy brand-new stuff there. Anyway, my point is that they are both ‘exchanges’.

    4. My point in linking eBay and TradeSports/InTrade was to say that liquid exchanges are a super-magnet for new traders interested by the game. Fresh traders gather at the most popular marketplace. My point is that, contrary to Google competitors, smarter technology and more ingenious marketing won’t be able to do the trick for eBay/TradeSports brand-new competitors. If Mike Linksvayer comes up with a search engine that is better than Google, I don’t care that I’m the only one to use it, as long as it does a better trick than Google. Such is not the case with an exchange —just like with a network, an exchange’s value is quantified by the square of the number of its traders.

    5. That leads me to a Tom Bell question. This honorable law professor wants to set up a prediction exchange trading only science claims ( ). What are the odds of his baby taking off? (Re-read all my comments on this blog if you can’t answer the question on your own right away.)

    6. Good point about commodity markets. I need to know more about them too.

    7. The data would come from TradeSports/InTrade… when the CFTC asks them (in the process of fining them!). They said that 30–40% of their revenue comes from U.S. customers.

    8. The exchanges’ monopoly is, as I said, theorical, and you’ve got a couple of good points. However, I’d be ready to bet —providing that legal constraints are out of the picture. Which exclude financial (and maybe sports) stuff. I’m adamant that, ten years ahead of us, unless John Delaney messes things up, TradeSports/InTrade/Trade4Real will still be the world’s leading prediction exchange (in value) when it comes to U.S. political futures markets —and that will be my last say before I die. Data regarding the amount of money moved by these prediction exchanges are usually provided to the media.

    9. I want Chris Hibbert (the Zocalo guy) as the judge. Chris Hibbert crowning me as the most forward thinker in the field of prediction markets —that will make up for a lot of my wet dreams in the coming decade. Two glasses of a good Burgundy over a dozen of French snails cooked with butter and garlic, and my happiness will be total.

    Best regards,

    Chris. F. Masse

  7. Prediction Markets Summit extract of an extract

    I sadly could not attend last Friday’s mini-conference in San Francisco on prediction markets, but Peter McCluskey has an informative write up.
    Apparently Tradesports explained why it makes it a pain to link to its contracts. They want to sell …

  8. […] Addendum 20060523: Masse thinks I’m crazy for creating a market on Inkling.  He doesn’t like Inkling because they removed one of their founders from their site (irrelevant, Masse-ive overreaction) and believes that liquidity is the most important attribute of an exchange, implied corollaries being that it is dumb to start a new exchange in an area where one already exists and it is dumb to allow user-created markets, both of which will lead to diffuse, thinly-traded markets. I think the field is far too young to say that a newcomer cannot topple existing exchanges even if they are natual monopolies (Chris and I already discussed this) or that large numbers of niche (and thus thinly traded) claims will not prove valuable. […]

Leave a Reply