Events Betting Site InTrade Is Completely Stopping Trading

[sailingaway]

Well-known online betting site InTrade is completely shutting down trading, according to a memo posted to its site. It's unclear if it will ever open again, as the language is rather opaque.
The news was first noticed by Wealth.net.
The full text of the memo is pasted below the dotted line. The memo hints at restoring services eventually, although the wording is very vague.
The Ireland-based InTrade was always controversial and popular during election season, as it allowed betters to gamble on various political outcomes (and other event-based outcomes).
Last November, the site was sued by the U.S. regulator the CFTC, and the site blocked all U.S.-based users.
The site was controversial not only because it let users trade on real events, but also how its odds were interpreted by the press, and whether or not the "prediction markets" it specialized in actually had predictive ability.
One InTrade we spoke to described themselves as "mildly panicked" as they had $700 in the site, and were unable to withdraw.
---------------------------------------------------------------------------------------
With sincere regret we must inform you that due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com.
These circumstances require immediate further investigation, and may include financial irregularities which in accordance with Irish law oblige the directors to take the following actions:
Cease exchange trading on the website immediately.
Settle all open positions and calculate the settled account value of all Member accounts immediately.
Cease all banking transactions for all existing Company accounts immediately.
During the upcoming weeks, we will investigate these circumstances further and determine the necessary course of action.
To mitigate any further risk to members’ accounts, we have closed and settled all open contracts at fair market value as of the close of business on March 10, 2013, in accordance with the Terms and Conditions of our customers’ use of the website. You may view your account details and settled account balances by logging into the website.
At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded.
The Company will continue the maintenance and technology operations of the exchange system so that all information is preserved properly.
We are not able to provide telephone support or live help services at this time, please contact the company by email at: accountservices@intrade.com
We appreciate your custom and support over the years. We are committed to reporting faithfully the status of things as they are clarified and hope you will bear with us as we do all we can to resume operations as promptly as possible.

Sincerely,
The Board of Directors of Intrade the Prediction Market Limited


Read more: http://www.businessinsider.com/intrade-shutting-down-2013-3#ixzz2NBjZ9CNi

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[RonPaulFanInGA]

http://money.cnn.com/2013/03/11/investing/intrade-shutdown/index.html

http://www.intrade.com/v4/home/

[muh_roads]

Were they predicting actual prices too often?

[Zippyjuan]

Supposedly over financial irregularities:
http://www.businessweek.com/articles/2013-03-11/whats-behind-the-mysterious-intrade-shutdown


In a cryptic message posted on Sunday night by its board of directors, Dublin-based Intrade said that “due to circumstances recently discovered, we must immediately cease trading activity.” Citing “financial irregularities” that appear to have run afoul of Irish law, Intrade said it will “investigate these circumstances” over the next few weeks. In the meantime, customer accounts have effectively been frozen, meaning that if you have money with Intrade, you’re not able to get it out right now.

So how predictable was this? Looking back at the last few months, the odds appeared to be turning against Intrade being able to keep its head above water. Twenty days after the trading site’s members correctly predicted the outcome of the U.S. presidential election, nailing the results of every state except Florida, the Commodity Futures Trading Commission filed a civil lawsuit against it for allowing people to bet on the price of things like gold, essentially labeling Intrade an unauthorized exchange. In a lot of ways, the site was functioning much like the Chicago Mercantile Exchange (CME), letting users dabble in futures and options contracts on everything from the weather to oil prices. The key difference, of course, was that Intrade wasn’t a regulated exchange, and its users could speculate on the future for a lot less money than if they went through the official channels.

The CFTC suit cost Intrade its U.S. users, who had constituted the bulk of its memberships.

Then in February, as reported by Bloomberg, an Irish auditing firm raised concerns about payments made to accounts controlled by Intrade’s late founder, John Delaney, who died in May 2011 while trying to climb Mt. Everest. That was a strange finding, considering Delaney’s been dead for nearly two years, but it raises the question of how Intrade was managing the cash in its customer accounts.

There is now speculation that Intrade committed the same sin as failed commodities brokerage MF Global—that it dipped into the cash balances of its customer accounts. To understand how this might have happened (again, pure speculation at this point), it’s useful to understand how Intrade funds itself. When it was initially founded by Delaney back in 1999, the site charged a per-trade fee of about 5¢. In January 2011 it switched to a flat monthly fee of $4.99 in order to boost liquidity, which it did. That monthly fee covered Intrade’s operational costs: salaries, technology expenses, etc., and was a function of how many members it had. After the CFTC suit purged Intrade of its U.S. customer base, it’s not a stretch to assume that Intrade was having a harder time funding itself.

And we certainly know that trading has dried up in recent months. According to Intrade’s own stats, only 52,166 trades have been executed on its site so far this year, for a grand total of 363,517 shares. That’s compared with more than 1 million trades in 2012, for a total of 23.8 million shares. As reported by the Financial Times in February, according to ComScore (SCOR), which tracks Internet traffic, the number of visitors to Intrade fell from 287,000 in November 2012 to just 67,000 in December. By January the number of visitors was too low to measure.


More at link.

[Zippyjuan]

Capture of their website posted at another link:
http://i2.cdn.turner.com/money/dam/assets/130311072333-intrade-shutdown-620xa.jpg


NEW YORK (CNNMoney)

Online prediction betting site Intrade has shut down due to a probe of financial irregularities.

A notice on the site's home page gave few details of the probe, but said that it had halted trading on the site "due to circumstances recently discovered" that require further investigation and "may include financial irregularities."

The site says it has closed and settled all open contracts at fair market value as of the close of business Sunday. But it said it is not possible to make any payments to members until the investigation is concluded.

The site, which allowed customers to place bets on matters such as U.S. presidential election outcomes, the weather or other upcoming events, is based in Ireland. The odds are set based on the bets made on both sides of the various predictions.

While the betters are right about some of the events they bet on, including President Obama's re-election last year, they are also wrong on some high-profile predictions, including setting odds at 80% that the U.S. Supreme Court would rule the health care reform act was unconstitutional.

The most active prediction contracts ahead of the shutdown were about the papal succession process now underway and whether the Democrats will win the 2016 presidential election. It predicted Archbishop Angelo Scola of Italy as the favorite papal candidate with a 25% chance of election, and said Democrats have a 56% of winning the White House again in 2016.

In late November, the U.S. Commodity Futures Trading Commission filed a complaint against Intrade that forced U.S. customers to close their accounts by the end of last year. The CFTC complaint charged Intrade with violating U.S. laws on options trading and making false statements in official filings.

It cited prediction contracts on certain U.S. economic numbers, when the prices of gold and currencies would reach a certain level, and whether specific acts of war would occur by a certain future date. The CFTC complaint said such prediction contracts needed to be traded on a CFTC-registered exchange. It said the rule was important because it "enables the CFTC to police market activity and protect market integrity."

[Matt McGuire]

I was very disappointed to see this on Intrade's front page (http://www.intrade.com/v4/home/) this week:


With sincere regret we must inform you that due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com.
These circumstances require immediate further investigation, and may include financial irregularities which in accordance with Irish law oblige the directors to take the following actions:
Cease exchange trading on the website immediately.
Settle all open positions and calculate the settled account value of all Member accounts immediately.
Cease all banking transactions for all existing Company accounts immediately.
During the upcoming weeks, we will investigate these circumstances further and determine the necessary course of action.
To mitigate any further risk to members’ accounts, we have closed and settled all open contracts at fair market value as of the close of business on March 10, 2013, in accordance with the Terms and Conditions of our customers’ use of the website. You may view your account details and settled account balances by logging into the website.
At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded.
The Company will continue the maintenance and technology operations of the exchange system so that all information is preserved properly.
We are not able to provide telephone support or live help services at this time, please contact the company by email at: accountservices@intrade.com
We appreciate your custom and support over the years. We are committed to reporting faithfully the status of things as they are clarified and hope you will bear with us as we do all we can to resume operations as promptly as possible.

Sincerely,
The Board of Directors of Intrade the Prediction Market Limited

Intrade was incredibly accurate in the 2012 primary season, as well as the general elections. While I wasn't interested in betting myself (The people on there are way smarter and better connected than me.), I was planning to use it to gauge to midterm elections, as well as the 2016 race.

This is a perfect example of a ridiculous law (gambling prohibition), and it nearly infuriates me.

[hazek]

They were shut down because they didn't use Bitcoin. :p

[Lucille]

Shutdown of Intrade Linked to Dead Founder
http://www.economicpolicyjournal.com/2013/03/shutdown-of-intrade-linked-to-dead.html


Intrade’s founder, John Delaney, died in 2011 as he tried to reach the summit of Mount Everest.

Since the death the company’s auditors have raised concerns over more than $1.5 million payments that had been made to Delaney and other unnamed third parties.

There were “significant financial irregularities in the internal accounts,” Intrade’s outside accountants said in a recent report to Irish authorities. “Insufficient documentation was available regarding payments made into bank accounts controlled by Mr. Delaney and other third parties.”

Dead men tell no tales, but they are also not around to monkey with the books to hide financial shenanigans from accountants.

The company’s current executives are not connected to the potential irregularities, the auditors have added.

[Matt McGuire]

Hmm, okay. I see that this may not have to do with online gambling regulations. Hopefully they will be able to clear up this mess quickly.

Still, I think that we could have many accurate and liquid prediction markets here in the US, if we just roll back some of these asinine regulations. These are one of the greatest things to have come from gambling. (And really, it's much more involved than gambling)