Intrade to Shutdown US Accounts
Frankly, I’m shocked the site was running for as long as it was. While a respectable “prediction” market (and by that, I mean wager book), the website was really nothing more than a place to put bets on elections and measure the ebb and flow of where the money was going.
While a common practice in the U.K — where Intrade is based and betting on election outcomes is the norm — it is also highly illegal in the U.S. This is only a natural reaction to the eventual crackdown. It just took a while for the authorities to catch up.
Online prediction market Intrade, hugely popular among political bloggers and pundits, will no longer allow U.S. residents to participate after running into regulatory and legal trouble Monday.
The company alerted American customers on its website that they must close their accounts by Dec. 23, or else the company will do so itself, after determining a fair market value. Funds must be withdrawn by Dec. 31.
Intrade, which is operated by the Irish firm Trade Exchange Network Ltd. was a favorite reference point for political prognosticators, who pointed to futures being traded on the outcome of the presidential election as a reflection of the odds facing each campaign.
The Commodities Futures Trading Commission sued Intrade and TEN on Monday for offering commodity options contracts between September 2007 and June 2012 in violation of the agency’s ban on off-exchange trading.
According to the suit, the CFTC claimed the firm filed false certification forms stating that Intrade limited its offerings to eligible market participants. The agency also claimed that TEN violated a cease-and-desist order, signed in 2005, covering similar conduct.
“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,” said David Meister, director of the CFTC’s Division of Enforcement.
Intrade said on its website that it would not charge its usual $4.99 monthly fee for December and will waive its $20 fee levied for processing bank wire withdraws.
I’m working under the assumption that one can still go to the website in the years to come, after all, this isn’t the Red Chinese’s “Great Firewall” we’re talking about here. The only question now is will they even bother to operate the markets as they’ve done in the past, with only those outside the U.S. allowed to participate, or just shutting them down completely?