In case you haven't seen it, Intrade is a 'prediction market' that works much like the stock exchange or the futures market
Here is how it works: Intrade defines "contracts" which offer a fixed payment of $10 based on the outcome of a future event. For example, there is a "Osama Bin Laden to be captured by Dec 15" contract that will pay out if Osama Bin Laden is captured by Dec 15. Intrade does not buy or sell these contracts, but only acts as a broker to allow their users to do so: users may post offers to buy or sell "Osama Bin Laden to be captured by Dec 15" contracts; Intrade merely matches buyers with sellers. If someone is offering to buy " Osama Bin Laden to be captured by Dec 15" for $6 and you offer to sell a contract for $6, Intrade will take $6 from the buyer's account, and $4 from your account, placing the total of $10 in a sort of escrow. (Note that selling " Osama Bin Laden to be captured by Dec 15" is exactly like buying "Osama Bin Laden NOT captured by Dec 15"; you don't have to own a share of "Osama Bin Laden to be captured by Dec 15" to sell it!) When the final outcome is known, the winner gets the $10 from the escrow. (Intrade also takes a small transaction fee from buyer and seller; this is how they make money.) For convenience, the posted prices of contracts are multiplied by 10, so that a contract bought for $5.53 is posted on the trading board as a price of 55.3 units.
The best part of Intrade is that users can have a simple bet on your selection to win, or not to win. You can now also trade your position, just like watching stocks, buying and selling your selections many times over. For instance, you can buy a contract that represents an event if you think it will happen or you can 'short sell' that contract if you think the event it represents is unlikely to occur.[E.g. If you bought 100 "Houston Astros to Win the World Series" contracts at 25 (25 being $2.50) you would be investing $250 (100 times $2.5) to win $750 (ie. 100 times $10-$2.50)] Think sophisticated betting :)
You can bet with a minimum of £1 and whilst there is no maximum you are limited based on the exposure per betting market which is set at £5000. This can be negotiated by contacting the helpdesk.
Another advantage of Intrade is that you can trade on margin. It cannot be stressed how much this helps. It means that with minimal funds in your account you can make a lot of trades - which is why it is excellent for smaller players who want to make fairly large bets. As with certain financial futures products, you can get 'margin called' and you need to be able to send funds to your account within a specified time period.
There is no "house" at Intrade. The market makers are independent individuals that have nothing to do with the business of Intrade. Obviously they have a better line with management with regards to which types of contracts to post, etc., but I'm pretty sure they don't get any other preferential treatment that would hurt "customers". In theory, any one of us could be a market maker and post lines anytime we want to.
Their fees are a flat USD0.04 per lot and a lot is the smallest quantity of each contract that may be bought or sold. Also known as the minimum contract size. Your trade may comprise more than one lot. The size of each contract's lot is defined in the Sports Rules and Contract Specifications to be found by clicking on the relevant contract symbol on the site. There's also a USD0.04 charge per lot for expired contracts. This setup is different to some of the other betting exchanges so make sure you understand them beforehand. You can still rest assured that they are significantly less than traditional bookies.
Note that odds/prices on Intrade are usually better than those available elsewhere, as the prices are established by you and other Intrade members at prices you want to trade at. This means that you are in control because you review what action is available before placing your bet, and if you don't like the action available you can post your own bet at the odds you think are fair.
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Despite its Dublin home, Intrade has a distinct American flavor. Contracts are dollar-denominated and it appears that most of the sporting events covered take place in the U.S.
Intrade biggest business is now on futures contracts that allow traders to speculate (some would say bet) on current events futures contracts ever since CNN/Money first highlighted its Saddam futures back in January.
There are also the natural events, things that the earth does, usually to us. There are economic, financial and business events like inflation, unemployment and FOMC actions. There are political events ranging from elections, to FDA approval of drugs, to armed conflict between states. There is a large group of entertainment events, which includes celebrity behavior and there is also a set of science event markets covering when theorems will be proven and humans will be cloned. My personal favorite is the market in whether the universe will eventually collapse. The marketplace notes that the universe doesn't have to actually collapse for the trader to collect, it just has to show signs that it has stopped expanding.
Other contracts currently offered allow traders to speculate on what the chances are that Osama Bin Laden will be captured by Dec 05 (15 percent according to the latest trade) and whether a Palestinian Stage will be established by the end of the year (1.1 percent chance it will be established).
Another plus of Intrade is that they post two-way markets for races that are in doubt. The house puts up bids and offers, usually about 200 contracts ($1000 for 50/50 propositions) with a spread of about five points. In addition, individuals post also, usually around 30-100 contracts. In addition to the price shown on the screen, there is an eight cent commission charged for most trades. So if you buy a contract at 50, you're actually paying $5.08 to win $4.92, about -103. The house bid/offer spread comes down to around four points when the price gets outside the 20-80 range.
The trick with trading is to keep buying and selling and take smaller profits as a game/event unfolds. take a simple example: Basketball..... The game will have numerous 'swings' of points where one team takes the lead (and its price goes up/therefore shortening) ~ if you have bought a team at 50 and it price shortens to 70 (as they lead) SELL them at 70, take that profit...and then wait for another opportunity to buy back in when they drop in price. Of course you can take the risk that they will win and you get the full 100 price for your 50pts....but what IF they lose...or its a very close game! Do you want to be sweating on the result??
If you bought a team at 50 before the game, (thats an even money wager) then it will cost you $5.00 per contract. So lets say you bought 10 x $5.00 'contracts' (a $50 wager)....the most they be worth to you if your team wins, is 10 x $10 ($100.00)...if you lose, then you lose the 10 x $5.00.
So your team take a solid early lead in the first period...and its contracts are now trading at 70pts....you have a profit there of 10 x $2.00 ($20.00) You sell....as you think the opposition are capable of making a decent comeback (perhaps you know the form) so you sell now, lock that profit...and wait. The game continues and sure enough the underdogs make a comeback and take a small lead....you buy your team back at 48....$4.80/contract...hoping that your team will go on and win...
so you buy 10 x $4.80....(again to get a return of $100.00) But remember you have $20.00 profit already, so although you have staked $48.00 on your 2nd trade, it has only cost you $28.00 in effect, to win $100.00...
Now I admit I've picked some pretty simplistic numbers above, but at least you get the general idea...its great fun, but it also allows you to trade in and out....which is so much better than a sportsbook wager, which you cannot change once its placed!
Deposits can be made by credit card, bank transfer, NETeller PrePaidATM or USD checks. All deposits are free of any charges which is a bonus in itself. You can make two withdrawals in any 30 day period for free (excluding bank transfers and PrePaidATM). Best to read their rules to ensure you avoid the charges if possible. It's fairly easy if you just use one of the other methods and don't withdraw too often. No problem really.
The Allied Irish Bank provides banking facilities which include "member specific bank accounts". The company auditors are PriceWaterhouseCoopers.
"member specific bank accounts" means segregated funds that are not under the control of Intrade, with the exception that you have given them the right to make deposits to and withdrawals from the account to settle your action on the exchange.
With the segregated account, you even get regular statements mailed to you. The service is free for accounts over $50k. I'm not quite there yet though. And you get paid 1% interest if your account balance at Intrade has 20k and above...Well, not much but everything helps since market makers need mega capital to run daily, so paying interest just helps these folks out by giving them what they'd get if they put the money in a savings account.
Is it legal for U.S. citizens to gamble? When I asked the Irish Intrade.com representative, she said she thought it was for residents of some states but not others, and she didn't know which.
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