I’m not a bettin’ man, probably because I’ve lost every time I’ve tried it. Still, I benefit from those who do. We all do. Betting odds give us information about what others believe, same as stock and bonds prices. And this collected knowledge, backed by real property, tells us more about the real world than we can otherwise discover on our own.
Just recently in the presidential election, for example, I followed Intrade.com’s election markets. Here, the odds are formed by people betting their own property on the outcome. They have every incentive to extract every possible amount of truth out there so that they can make their money work for them.
I figured that the markets knew more than the blabberheads on television. This way I could ignore all election coverage. One guy would win, and it would probably be the one Intrade said would win, and then the whole thing would end. I would have used my time during the season doing actual productive things, rather than listening to the dopes on television who pretend to know what they do not.
It turns out, of course, that Intrade was right. Obama won. Romney never really had a serious chance, despite what every Republican operative claimed even up to the last minutes before the election was called. Intrade might have been wrong, of course, but it turned out to be more right than every expert.
My strategy of following the markets over the pundits worked. That’s generally true of markets: They are more correct than any individual. Not always, but most of the time.
It further turns out that I’m not alone. Even Washington Post energy reporter Brad Plumer wrote, “I’ll confess, I spent a good chunk of the 2012 campaign clicking on Intrade.com several times a day to see where the House, Senate, and presidential races stood. All those traders betting on the eventual outcome, I figured, could provide a more accurate synopsis of the race than reading endless blog posts and tweets.”
He points out that Intrade predicted 49 out of 50 state races as well.
Now just imagine my shock to hear that Intrade, a site based in Ireland, had been body-bagged by the government. This news was stunning to me. I had to see it to believe it. I mean, this isn’t a meth lab. It’s a site for the facilitation of a very normal human activity, namely betting on stuff.
It turns out that the case is a bit more complicated. The site is not shut for international users. This was not the FBI at work here. True, the FBI and U.S. Customs and Homeland Security shut down sites every day. On Cyber Monday, more than 100 websites were body-bagged and stolen from their rightful owners. It’s the government’s war on your right to know.
Intrade, by comparison, has received kid glove treatment. Americans have been barred from using the website. Everyone else in the world can use it, but Americans cannot, at least not legally. The reason, supposedly, is that Intrade allows betting on price movements in commodities. That puts it under the jurisdiction of the Commodity Futures Trading Commission.
People are trading in an unregulated environment and the U.S. government doesn’t like that kind of thing. For most governments in the world, it’s neither here nor there, but for the U.S.? No trading without regulation. Your overlords must approve or disapprove all that you do.
Intrade believes that it can deal with the CFTC’s complaints and reopen for Americans too, even though Americans were barely able to use the site in the first place, given the extreme restrictions on cash transfers in the U.S. relative to the rest of the world.
But some close observers aren’t so sure. Rajiv Sethi points out that the CFTC has only recently barred any betting on political elections in particular. A press release dated April 2, 2012 said: “The Commodity Futures Trading Commission (CFTC) today issued an order pursuant to Section 5c(c)(5)(C)(ii) of the Commodity Exchange Act and CFTC Regulation 40.11(a)(1), prohibiting the North American Derivatives Exchange (Nadex) from listing or making available for clearing or trading a set of self-certified political event derivatives contracts. The contracts are binary option contracts that pay out based upon the results of various U.S federal elections to be held in 2012.”
This is a violation of human rights. In a free society, people should be allowed to bet on anything, such as in Guys and Dolls when Nathan Detroit tries to trick Sky Masterson to bet on whether the kitchen has served more strudel or cheesecake that day. Nathan had been counting, so the system is rigged. Sky knows it and Detroit gets beaten. So it goes in a free market. People work out their issues and problems in an environment of liberty.
The CFTC will have none of it, but why? What is wrong with having a market in which people trade real property and the results benefit everyone else by broadcasting information? If we can’t have that information, we are being forcibly denied knowledge that helps us live better. Nothing is to be gained by shutting it down. And yet government usually always gains from even its stupidest policies. There is usually something going on behind the scenes. What it is and who it is can be very difficult to detect.
Now, you might say this is not really an attack on betting in general. This is a specific case that represents no larger threat. I’m not so sure. Last year, I wrote about a gambling site that was shut down with no public notice and no controversy. Two years ago, there was a big crackdown on Internet poker that ended up stealing millions in assets. Now we have this attack on what I thought was a very mainstream and upstanding website used frequently by academics and reporters.
The attack on the Internet is real. It is getting more intense. In every case, there seems to be a plausible excuse: futures trading, piracy, counterfeit goods, violation of copyright, financial fraud, national threats, you name it. You can rationalize them all.
But here’s the thing. There is a sense in which there is always a rationale for tyranny, always a seemingly good excuse for shutting down human freedom. The mass allowance of human volition always seems dangerous to the despot. That’s why freedom itself is always and everywhere on the defensive against all-knowing dictators who are quick to say that they have a better way. But if we let them get away with it time after time, excusing their every encroachment as an exception with a plausible basis in this one particular case, eventually, they will come for you. You will see the injustice clearly and experience the violation personally. But then it will be too late.
I’m firmly convinced that technology and human freedom will triumph over reaction and despotism in the end. Of that I have no doubt. The digital revolution is too far along to be turned back. But there is a lot of static between now and the endgame. It is always a good time to be jealous of human rights and passionate about liberty.
Thank goodness for the geeks all over the world who are inventing technologies that prepare for the worse. So long as governments survive, they will conspire against the people. It’s a race between us and them.
The attack on Intrade should put people on notice: There is no safe place for anyone when the regulators are free to do whatever they want for any reason they deem appropriate at the time.
Sincerely,
Jeffrey Tucker
