I recently discovered how much fun futures markets can be. If you’re a political junkie, buying and selling political futures is a great way to stay informed (especially during primary season), make a little money (unless you’d rather take the safer route and play with fake money) and, in a small way, participate in the political process itself.The two prediction markets I use are Intrade and Hubdub.
By far the more sophisiticated of the two markets, Intrade allows users to buy and sell contracts on a wide variety of political and economic events.
Contracts are generated by the site, and users buy and sell them from one another. Contracts trade on a scale between 0 and 100. The price of a contract reflects the probability of that event occuring according to Intrade users. Contracts that ‘come true’ automatically rise to 100 points while those that do not fall to 0. Each successful contract pays $10. Failed contracts are worth nothing.
If you’re not down with playing for real cash you can also opt out and play with practice dollars.
Intrade sounds complicated, but it’s a lot of fun. I’d definitely recommend it for people who are keeping close tabs on the American primaries.
Much more laidback than Intrade, Hubdub is a new market that has been described as Digg with betting.
Users buy and sell contracts created by other users. Each contract also includes relevant news articles and users vote on which articles are more relevant than others (thus the Digg reference).
Unfortunately, the fact that users are able to create their own contracts means some of them are a little ridiculous (e.g. ‘Will Jesus return to Earth before the end of 2008?’ – which is currently trading at 99% ‘No’).
On the other hand, it’s much easier to use than Intrade. Instead of buying and selling contracts from other users, betting on a Hubdub contract requires only two mouse clicks – the first to select your choice (e.g. on the contract ‘Who will be the Democratic presidential nominee?’ you are asked to choose between Clinton, Barack and Other) and the second to reflect how confident you are it will happen – ‘definitely,’ ‘probably’ or ‘maybe.’ All Hubdub trades are conducted with fake Hubdub dollars, or Hubdub bucks or whatever.
There are plenty of other markets out there, each with their own slightly different method for betting on the future.
I’m just hoping Barack wins the Democratic presidential nomination. If not, I’ll be out like 3,000 fake dollars.