iPredict

» see ipredict.co.nz as it lived, on the wayback machine

~ the last words ~

iPredict opened on 9 September 2008, a few weeks before a New Zealand general election, built by Victoria Link, the commercial arm of Victoria University of Wellington. It was jointly owned by the university and the New Zealand Institute for the Study of Competition and Regulation, which tells you the intent: this was an economics department running a live experiment in public and letting anyone put money on it.

The instrument was a contract that settled at either one dollar or nothing. "There will be a National Party Prime Minister after the next General Election" was a real one. If it happened, the contract paid a dollar. If it did not, it paid zero. The price in between, anywhere from one cent to ninety nine, was the market's read on the odds, and reading a percentage straight off a price is the whole reason prediction markets exist.

Eight years later, on the evening of 30 November 2016, trading was suspended and a notice went up asking members what they wanted done with the balance in their accounts. Withdraw it, or hand it to the university. The site closed the next day.

~ the record ~

~ how a dollar became a probability ~

The fee structure was built to keep the thing small and legible. Half a cent per share traded, capped at five percent of any trade's value and capped again at five dollars a month per person. Credit card deposits cost 1.75 percent while a manual bank transfer cost nothing. Withdrawals were only charged if you were up. One account per trading persona, and no more than $2,500 deposited per six months. In 2011 management floated a $2.50 monthly account fee, the traders objected, and the idea was dropped.

Legally it lived in a gap. Under New Zealand's Gambling Act only the Lotteries Commission and the TAB can take bets over the internet, and the Problem Gambling Foundation was not happy about any of this. iPredict got around the problem by being authorized as a futures dealer by the Securities Commission, which made it a financial market rather than a bookmaker. That distinction held up for the entire eight years and had nothing to do with how it ended.

Two things kept me out of it. Money had to move through a New Zealand bank or a card the site would take, and most of what was worth trading concerned a parliament on the other side of the world. What I find myself rereading is the forty one dollars. That was the average net worth of a trader, published by the site in its own closing notice, and it is a number that quietly describes what kind of place this was.

~ the sixty dollar bet ~

In 2013 one trader put sixty dollars on a barely traded contract about Peter Dunne, then under investigation over the leak of the Kitteridge report. The bet moved the price, the price moved other traders, the resulting volume knocked the site offline, and the outage was initially read as a denial of service attack. Some of the media coverage treated the price swing as information. Nicky Hager's Dirty Politics the following year noted that National Party people had been gaming the markets, and by the 2014 election the weekly market reports were being compiled pro bono by Exceltium, a Wellington public affairs firm majority owned by the lobbyist Matthew Hooton.

~ twelve months of afterlife ~

On 26 November 2015 iPredict announced it was winding up. Associate Minister of Justice Simon Bridges had refused its application for an exemption from the Anti-Money Laundering and Countering Financing of Terrorism Act, on the grounds that the operator never verified who its customers were while letting funds move in and out from overseas. The deposit ceiling, Bridges added, could be beaten by opening more accounts. For a non profit with forty one dollars sitting in the average account, identity verification cost more than the market earned.

Then came the strange part. New traders and new money were barred immediately, but the existing pool kept trading for another twelve months, which means the final year of New Zealand's best known prediction market ran on a closed and slowly shrinking set of participants who could not be topped up. Its own operators said as much about the accuracy. Go to ipredict.co.nz today and the marketing homepage is still there, served off a modern nginx box, still inviting you to sign up for free, its copyright line reading "Copyright © 2011 -" with the end year left blank for a script that will never run again. The application behind it redirects away. The shop window survived the shop.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »