Is the fellow simply a wealthy and wild-eyed McCain supporter, or as one expert speculates, “… one of the most foolish investors in the world?”
Those are not the only two options. Something else may have motivated an individual to “invest” hundreds of thousands of dollars on Intrade in recent weeks in bullish anticipation of a McCain victory that neither other predictive markets nor public opinion polls are foretelling at the moment. The fact that these bets have created nothing but real losses for the “investor” and an artificially inflated “price” on Intrade’s McCain futures has had eyebrows raised and tongues a-waggin’ about a possible political motivation.
It has also prompted an investigation by Intrade, as well as this statement from the company’s CEO, which while exonerating the McCain enthusiast of any Intrade rules violations, is unlikely to put the matter to rest.
“I’ve always wondered if someone might try this,” writes Josh Marshall on the political site Talking Points Memo. … Me, too.
From a story in Congressional Quarterly:
Over the past several weeks, the investor has pushed hundreds of thousands of dollars into one of Intrade’s predictive markets for the presidential election, the company said, resulting in great financial losses through a strategy that belies any financial motive.
“The trading that caused the unusual price movements and discrepancies was principally due to a single ‘institutional’ member on Intrade,” said the company’s chief executive, John Delaney, in a statement released Thursday. “We have been in contact with the firm on a number of occasions. I have spoken to those involved personally.”
After an extensive investigation into the suspicious trading patterns, Intrade found no wrongdoing of violation of its exchange rules, the company said.
The Congressional Quarterly story provides a thorough analysis of the situation and plenty of expert skepticism.
By the way, my knowing virtually nothing about predictive markets hasn’t kept me from wondering why U.S. politicians don’t attack this kind of Internet gambling operation with the same vigor they apply to online poker palaces — but that’s a topic for another day.
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