Good news re: Intrade

Intrade was an interesting idea. People would wager a couple bucks of real money on the outcome of things. They would buy futures in Presidential elections, Oscar winnings, airstrikes against Iran, etc... The level of accurate prediction was amazing. Needless to say, the Federal Government tried to shut them down. From FOX Business:

Government Crushes Innovative Online Prediction Market
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.

That's terrible news for all of us who want more input into what's going to happen in the future. Bettors on Intrade.com have made incredibly accurate predictions about elections - because they, unlike TV pundits, have real money on the line. This year, I watched on election night as TV pundits said "too close to call... too close to call..." while the bettors on Intrade knew that it was not a close call.

Intrade has also successfully predicted events like Saddam Hussein's capture and the winner of the Oscars. People with the best information trade about those events, and drive up the odds on Intrade.

Why did the American government sue Intrade? It was not for operating an online gambling operation, but for allegedly violating America's incomprehensible financial regulations -- specifically, these ones:

"Section 4c(b) and 9(a)(3) of the [Commodity Exchange] Act, ��6c(b) and 13(a)(3) (2006); Section 2(e) of the Act, as amended by the Dodd-Frank Act, to be codified at 7 U.S.C. � 2(e); and Regulation 32, as amended, to be codified at 17 C.F.R. � 32 (2011);"

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.

Fortunately, the brilliant legal minds at Intrade have found a loophole and they will be back in business soon:

The report of Intrade's death was premature
We understand yesterday's announcement was met with surprise and disappointment by our US customers, but this in no way signals the end of Intrade in the US. In the near future we'll announce plans for a new exchange model that will allow legal participation from all jurisdictions - including the US. We believe this new model will further enhance Intrade's position as the leading prediction market platform for real time probabilities about future events.

For our non-US customers, we will continue to offer real-money prediction markets. In the coming weeks and months we plan to implement a number of improvements to the Intrade website. These include expanding our market categories, adding more convenient funding options and a new and improved trading interface. We�ll keep you posted on these initiatives as they develop.