Thursday, January 26, 2006

Poolitics: A Pari-Mutuel Prediction Market

One of my students tipped me off to Poolitics, yet another entry in the burgeoning category of real-money prediction exchanges. Poolitics has some interesting features, as well as some rather dubious ones.

On the merely interesting front, Poolitics offers trading on a wide variety of political and legal events. It thus appears to aim pretty squarely at the same customers that The Washington Stock Exchange hopes attract. Poolitics offers trading on a handful of scientific and technological issues, too, which would attract the Simon Exchange's would-be customer base. Poolitics thus deserves credit for boldly forging ahead where other exchanges remain merely hypothetical.

On the dubious front, Poolitics appears to run the same legal risks that the Washington Stock Exchange or the Simon Exchange would if they offered real-money trading. Like those U.S.-based enterprises, Poolitics has domestic ties that would render it susceptible to U.S. law. A WhoIs search shows that LLC of New York, NY, owns the site.

No problem, there; Poolitics gets points for guts. So long as it sticks to predictions in which skill predominates over chance in determining winners, moreover, it should enjoy a pretty good defense against anti-gambling laws. Distressingly, though, Poolitics neither discloses details of its management (unlike the even more gutsy, domestic, real-money market, Ticket Reserve), nor offers any explanation of its legality (a failing it shares with Ticket Reserve).

Poolitics has a distinctly amateurish feel. I've found no indication of what transaction costs it charges. Pari-mutuels usually charge very high ones—well above those charged by futures markets and the like. Certainly, Poolitic's stunningly brief Terms of Service statement does not clarify the matter. Does it charge nothing? Again, I cannot tell.

Perhaps as a consequence of those somewhat unprofessional omissions, the site does not appear to attract much traffic. Still, though, I'm happy to see it up-and-running. Let a thousand prediction markets bloom!


Chris Hibbert said...

Pari-mutuels usually charge very high ones—well above those charged by futures markets and the like. Does it charge nothing? Again, I cannot tell. gives the answer. They take 1/6 of the bets on Standard, Featured, and Premium pools. Progressive charge a varying amount.

Perhaps I should have blogged this rather than replying to your comments, so I could get some free capital, too. When I do, I'll be sure to point out that this site doesn't make visible predictions; there's no indication of how much has been invested in each outcome of the various claims.

Tom W. Bell said...

Thanks, Chris. By all means, do please blog on it. I hadn't thought of the critiques you add, and would like to hear more of your thoughts.