Intrade

» see intrade.com as it lived, on the wayback machine

~ the obit ~

Intrade was a market where the tradable thing was a sentence about the future. Will this candidate win Ohio. Will this country be bombed before June. Each contract settled at 100 if the sentence turned out true and at zero if it did not, so the price in between read as a percentage, and the percentage was the crowd's answer. Ron Bernstein and Sean McNamara set it up in 1999. Tradesports, run by the Dublin entrepreneur John Delaney, acquired it in 2003 and folded everything into a holding company called Trade Exchange Network. In 2007 that was split apart again, and one of the pieces was Intrade The Prediction Market Limited.

Ireland is where it lived, which was the whole business model. American law does not know what to do with a thing that is neither a casino nor a commodities exchange, so Intrade stayed in Dublin, took American money anyway, and spent a decade being quoted in American political journalism as though it were an official instrument. Nate Silver argued with its numbers. Newspapers printed its odds beside their own polling.

I came to it the way most people outside the trade did, through election coverage. A line in an article, a chart with an Intrade price on it, in 2008 and again in 2012. I never opened an account and would not have been able to fund one easily from Turkey. The reason to remember Intrade has nothing to do with using it: for about ten years it was the closest thing the internet had to a live scoreboard on whether things were going to happen.

~ the rap sheet ~

~ the CEO who did not come down ~

John Delaney was born in 1969 and ran Intrade from 2003. In May 2011 he was on Everest. He got within fifty meters of the summit and died there on 21 May, aged 42. His daughter had been born while the expedition was on the mountain.

The company continued. It would take another two years and a forensic look at the books before anyone outside it understood that Delaney's death had also removed the only person who could explain a set of payments.

~ November 2012 ~

The election was the high point and also the end of the runway. Intrade's markets got the outcome right in every state contest except Florida and Virginia, the two nobody got right, and traffic went past fifty million page views a month across October and November. It was, briefly, a piece of American civic infrastructure operated by a small Irish company nobody had audited.

On 26 November the Commodity Futures Trading Commission filed a civil suit in federal court in Washington. The complaint was not really about elections. It was about Intrade listing contracts on gold and oil, which makes it an off-exchange options venue, which is squarely the CFTC's business. On 23 December Intrade closed every American account. The largest part of its user base was gone in a month.

~ financial irregularities ~

On 10 March 2013 the board put up a notice suspending all trading, and used the phrase "financial irregularities" about itself. Customer balances froze where they sat. What the later investigation turned up was more than two million dollars in payments with insufficient documentation, moving through accounts Delaney controlled, and Irish authorities looking at roughly one and a half million of it that had come out of money supposed to be held in trust for traders.

Nobody ever traded on Intrade again. In August 2014 the company said it would close all accounts and return what was left by the end of that year. The domain today serves a GoDaddy site builder page for an unrelated business called InTrade, which is a plain enough ending for a market that had a price for everything.

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