Predictive Markets and Lunar Gambling

Predictive Markets and Lunar Gambling
teamodds.pngA few years back, while I was finishing my master's degree at the MIT Media Lab, a fellow researcher proposed an interesting idea: why not use predictive markets to determine unknown outcomes (we happened to be talking about music sales)? The idea, I suppose, is not new. Futures markets and other derivatives have been around for a long time. But while corn and hog prices may be easily determined, why couldn't we understand other outcome-based situations as well?

As it turns out, you can. Futures markets have been used for a number of interesting uses, including predicting presidential elections, projecting box office returns, and even determining whether or not Tony Soprano would die in the series finale of his eponymous show.

Well now you can predict when we'll get back to the Moon.

Intrade.com has designed a security to determine whether the Google Lunar X PRIZE will be won by December 2012 (careful, link will resize your browser). Sadly, shares are currently trading at around 20 (max of 100), but trade volume is extremely low. I imagine as the PRIZE progresses, it will begin to move again.

Of course, the line between futures markets and betting is rather thin. Some markets, such as the Hollywood Stock Exchange, use fake currency (they call it H$), and allow users to trade their currency for branded merchandise. But many other markets, including the Iowa Electronic Markets use real-world currency. And the predictive futures trend has continued to online gambling sites as well. Some of these markets are regulated, others are not. It's a bit of a grey area.

And then things get even weirder. A site called Longbets.com has a prediction that casinos will appear on the moon by 2040. As of this writing, the odds are about 50/50. But Longbets.com works a little differently than many predictive markets. For starters, it's a nonprofit company. Proposing a prediction costs US$50. Then, in order to bet on this prediction, it costs $200. Payoff amount is confusing and the whole process seems a little too intricate.

But wait! Another Google Lunar X PRIZE prediction!

Sister site Predictify.com has a bet running based on TWO outcomes of the Google Lunar X PRIZE: prize won by 2012, and prize won by 2013.

We've been thinking of having something of a running leaderboard at the Google Lunar X PRIZE homepage, with all the official teams ranked based on public opinion of who will win. We recently ran a quick survey: Who is your favorite team? With some clever self-promotion, team Lunatrex stole the contest. But what if we kept this as a running feature? Would you like to see a leaderboard?

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