Tradesports' fail to pay

Discussion in 'Chit Chat' started by BlueHorseshoe, Aug 9, 2006.

  1. Appears that anyone who bought a contract that N Korea would launch a missile test Didn't get paid. Just drives home the importance of knowing the contract you trade:

    To the Pink Sheets! Tradesports' Bad Call
    in Data Analysis | Markets | Psychology/Sentiment

    Prediction market guru Chris Masse, along with columnist Don Luskin, takes a well aimed potshot at the prediction markets: Tradesports' Bad Call.

    "GEOPOLITICAL RISK — uncertainty about war, terrorism or political developments — can be very hazardous to your portfolio's health.

    Fortunately, modern financial markets have developed innovative new products to help hedge geopolitical risk. Now you can trade futures contracts on who the next president will be, whether or not the U.S. will bomb Iran, whether Hamas will diplomatically recognize Israel, whether Osama Bin Laden will be apprehended, and many more.

    But this week some investors learned that this particular financial innovation carries special risks all its own — as one of these geopolitical futures markets blew up right in their faces.

    The blow-up happened in the market for futures contracts on whether North Korea would test a long-range missile. That's just what Kim Jong Il's totalitarian regime did on July 4, raising tensions throughout the region and triggering a 6% drop in the Tokyo stock market. Anyone who bought the futures contracts should have had a big payday. But that's not the way it turned out. Those investors ended up losing 100% of their money.

    The big payday came for those who took the wrong side of the trade. Even though North Korea did test its missiles, those who bet that it wouldn't are the ones who made all the money.

    These futures contracts trade online at Tradesports, a web site based in Dublin, Ireland, that offers trading in all manner of sports, political and geopolitical events.

    Understand what happened here: The North Koreans launched their missile, but Tradesports was unable to officially confirm that with the U.S. DoD. That's a rookie mistake, and it certainly would make me uncomfortable risking real cash with a firm with such a silly management team in place.

    Kudos to Chris Masse -- one of prediction markets biggest fans -- for going postal on Tradesports for their bad judgement. (If you are interestedin the subject, then definitely read Masse's full post here: TradeSports / InTrade's North Korean Missile Contract),
  2. The obviously thing TS needs to do, to avert a PR disaster: <b>Immediately</b> pay BOTH sides of the bet. It'll be cheaper for them in the long run...
  3. ... wow, and to think a few weeks ago when i saw this website for the first time, I thought it looked like a cool thing to try out....

    That sucks