I’m late on this; it’s been in my stack for awhile now. But what in the world can be gained by the government suing Intrade?
Today, Americans were told that they must close their Intrade.com accounts. That happened because the federal government agency known as the “Commodity Futures Trading Commission” (CFTC) today sued the prediction market, where people from all over the world bet about things like who will win elections.
Intrade decided all its U.S. customers must now close their accounts and withdraw their money from the site.
I’m sure someone somewhere feels that I, the wilting consumer, must be protected from myself, but seriously. How is this good?
What law are they breaking?
In English: the government says that many of the things Intrade allows people to predict – everything from what the price of gold will be in the future to whether the U.S. will go to war soon – are legally considered “commodity options,” and that Intrade broke the law because it isn’t licensed to trade those. The penalty is $140,000 per violation.
So, just get a license:
Why doesn’t Intrade just obey the complicated law and become a licensed exchange? They tried, but the CFTC won’t give them a license. When an established, licensed U.S. commodity exchange applied for permission to do what Intrade does, the CFTC turned them down, too.
The pompous CFTC enforcer claims that the regulation “is important for a number of reasons, including that it enables the CFTC to police market activity.”
This is the perfect microcosm that is the state of government today. And Stossel sums it up perfectly:
Please. These regulations don’t help police market activity. When people make money on Intrade, Intrade sends them the money. There are no allegations of fraud. Customers are happy with Intrade, judging by increased activity on the site (over $50 million was bet about whether Obama or Romney would win.)
The market polices itself.
In a sane world, government would focus on preventing fraud, not on crushing innovative ideas.
Stossel goes on to point out that this isn’t just a democrat or republican problem, rather it’s the mindset that gentle flower that is the rugged American needs protection from …. from something, surely. And THIS is the state of our future that I fear. How to prove to, to convince, people that the future may not be “bad” with these rules, but it certainly is less better.