CFTC Considers Regulating Prediction Markets

In what may be the biggest news for the nascent industry yet, the Commodity Futures Trading Commission (CFTC) is hinting that it may be ready to regulate political prediction markets. A recent press release touts the evolution of markets and encourages members of the public to submit comments about whether they should be grantd full legal status in the United States:

CFTC Requests Public Input on Possible Regulation of “Event Contracts”
Washington, DC – The Commodity Futures Trading Commission (CFTC) is asking for public comment on the appropriate regulatory treatment of financial agreements offered by markets commonly referred to as event, prediction, or information markets.

During the past several years, the CFTC has received numerous requests for guidance involving the trading of event contracts. These contracts typically involve financial agreements that are linked to events or measurable outcomes and often serve as information collection vehicles. The contracts are based on a broad spectrum of events, such as the results of presidential elections, world population levels, or economic measures.

“Event markets are rapidly evolving, and growing, presenting a host of difficult policy and legal questions including: What public purpose is served in the oversight of these markets and what differentiates these markets from pure gambling outside the CFTC’s jurisdiction?” said CFTC Acting chairman Walt Lukken. “The CFTC is evaluating how these markets should be regulated with the proper protections in place and I encourage members of the public to provide their views.”

See full press release here

Obviously, great news for traders, entrepreneurs, and armchair prediction-market pundits alike. Whether you've studied the accuracy of prediction markets, written about the tax implications of legalizing them, or are simply looking for a recession-proof way to make a bundle while Wall Street gets walloped, it's time to chime in. Submit your comments to secretary@cftc.gov.

For Rudy, Even on Intrade It's All About 911

We couldn't help but notice the current volume of Giuliani contracts to win the Florida Republican primary. Coincidence? Come on!

Taking Giuliani's Temperature

While rumors continue to circulate regarding the severity of the former front-runner's flu, the one thing that isn't in doubt is the poor health of his stock on Intrade. As Josh Marshall noted in a recent post on Talking Points Memo, Giuliani's anemic numbers suggest that the slew of scandals surrounding his campaign have finally taken their toll. Whereas the former New York City mayor spent the better part of the summer trading above 40, he recently reached a new low in the 20s.

Bottom line - It's time to sell your Giuliani stock before the bad news breaks out of Iowa and NH. Otherwise, you'll be forced to join in the Florida fire sale once the so-called firewall fails.

The bigger news, of course, is that Josh Marshall admits being "sort of a fanatic about these political prediction/betting sites." We hope that he'll clue us in on his political portfolio in the comments, and we encourage all political pundits (armchair and otherwise) to join in the discussion.

Gingrich: Obama Will Win in Iowa

Newt Gingrich, polarizing politician-turned prolific predictor, is at it again. In an interview with Diane Sawyer on Good Morning America, the former Speaker of the House said the smart money is now on Obama in Iowa. "My guess is Senator Obama's going to win Iowa and that he's going to win it by a surprising margin," he said.

Just two months ago, however, Gingrich seemed convinced that Clinton was unstoppable. "I think the odds are 80 per cent that Sen. Clinton is the next president," he said after announcing that he didn't intend to compete for the Republican nomination in 2008. "I think she is almost certainly going to win the Democratic nomination."

So why is Newt suddenly hedging on Hillary? He says it's a hunch. "The emotional energy that Senator Obama's building is more powerful than the emotional energy Senator Clinton's building," he told Sawyer.

Slightly more scientific support for such speculation can be found in this week's latest ABC/Washington Post. Senator Obama has opened a slight, albeit still statistically insignificant, lead over Clinton and Edwards (30%-26%-22% respectively). On Intrade, the two top contenders are trading in a tie for the lead in Iowa at 45.

The Bottom Line: If you trust the former Speaker of the House with your money, invest in Obama to win in Iowa.

Awww, Hucks: Media Goes Mad for Former Arkansas Gov.

Another charismatic, likeable, funny former fat guy from a mobile home in a town called Hope just might be this election's Comeback Kid. If he's not yet in your political portfolio, then you've already missed out on the close to 50 cents per share in profits you could have pulled in since the start of the month. Without further ado, we highlight the making of the media's latest crush, as told through The New York Times.

• Gail Collins, in an Op-Ed entitled "Who Doesn't Heart Huckabee," wonders why the so-called value voters haven't yet followed Chuck Norris' endorsement and fallen head over heels for the one of the only candidates still "on his first wife and first position on abortion."



• David Brooks believes he's a "good campaigner," and a normal, neighborly, "collaborative conservative" whose Biblical and gubernatorial credentials will serve him well with white working class Republicans. "He’s rising in the polls, especially in Iowa," concludes Brooks. "His popularity with the press corps suggests he could catch a free media wave that would put him in the top tier. He deserves to be there."



• In a recent article on Huckabee's rising poll numbers and climbing campaign cash total, Times political reporter Michael Luo put it this way: "With less than two months until Iowa’s first-in-the-nation caucuses, there are signs that Mr. Huckabee, a former Baptist pastor for whom Bible verses flow easily off the tongue, is charming, quipping and sermonizing his way from a long shot ensconced in the second tier of the Republican presidential sweepstakes to a possible contender here.

The Bottom Line: Buy as many Mike Huckabee contracts as you can afford. As long as he continues to poll close to Romney in Iowa, pundits will keep harping on Huckabee as the Republicans' great Hope.

Bloomberg Hits The Books: Is He Preparing For Prime Time?

Sam Stein, a recent Huffington Post hire and fellow graduate of the venerable Tom Edsall school of political analysis, is reporting that Bloomberg is cramming on foreign policy in advance of a potential presidential bid. If true, the news certainly seems like solid evidence that Bloomberg is still flirting with a bid - at least the most intriguing speculation since Newsweek editor Jon Meacham profiled the coy possible candidate in a recent cover story and announced that Bloomberg's chief strategist thinks his boss would blow a billion bucks on the campaign.

The Bottom Line: Bloomberg's stock, which has been trading for weeks around 14, is likely to spike as more details emerge and further rumors become rampant. It's time to make the billionaire's fortune work for you. Politickr continues to doubt that the NYC mayor would seriously consider running against Hillary and Rudy in a three-way New York race for the White House. If, however, Rudy falters in the early primaries, bet big on Bloomberg. Either way, it's time to stock up on shares in the business mogul and realize some short term gains.

HuffingtonPost Tracks Intrade

It looks like political bloggers are finally beginning to take note of Intrade's growing popularity. HuffingtonPost, the wildly popular left-leaning blog, just started publishing the latest political odds.

The Bottom Line - Conservative bloggers, time to keep pace! The newly launched Fox Business News needs to score an interview with CEO John Delaney.