In an interesting article in this month's ABA Journal, Eriq Gardner profiled a site called SportsJudge, which arbitrates fantasy sports disputes. Started by a lawyer named Marc Edelman, the site draws on contract principles and its own common law of fantasy sport precedents to resolve disputes among league participants.
While the prediction market industry doesn't yet have the economic impact of the fantasy sports sector, it certainly does have its own fair share of contract disputes. Intrade CEO John Delaney has acknowledged the inevitable difficulty of dealing with ambiguities in contract language, despite downplaying the frequency of such disputes at Intrade.
Still, as the industry continues to grow and the number of contracts climbs, there will be an obvious need for lawyers to carefully craft contract language and arbitrate conflicts. In fact, much of the early criticism of political prediction markets has centered around the potential problems of market manipulation. In a fascinating forthcoming journal article on that issue, Alexandra Newman, a colleague of mine, argues persuasively that political prediction markets should be treated like a league of their own.
So, how about an independent arbitrator for political prediction markets who could quickly rule on contract spats and accusations of market manipulation? Judges, after all, bend over backwards to avoid adjudicating non-justiciable political questions. Thus, even if political prediction markets gained full legal status from the CFTC, it would be hard to imagine that such cases could be resolved efficiently by the courts.
To that end, Politickr, a newly minted law school graduate, proposes becoming the industry's first political prediction market arbitrator. Any other lawyers interested in joining me to create the SportsJudge.com for political prediction markets?
