September 21, 2005
Information Markets, Fantasy Sports, and Gambling
Posted by Christine Hurt

Tyler Cowen reports that a new information market, ProTrade, is appearing that allows participants to buy shares in individual sports players, not just teams.  Initially, participants will be given play money, but the site plans to eventually charge a fee, keep fees in escrow, and distribute 97-98% in prizes.  I would suggest charging an "administration fee" and offering stated, non-fluctuating prize amounts, similar to other fantasy sports sites.  Or, get a no-action letter from the SEC like the Iowa Electronic Markets.  In time, the distinction between illegal sports gambling and recreational fantasy sports and information markets is going to get blurrier and blurrier.  I hope so -- then the federal government may have to make a decision as to what is legal and what is not, and back that up with a consistent policy statement.

Another interesting, but related question, is whether professional athletes will be able to participate.  Although professional athletes in most sports are not allowed to bet on their sport, leagues have turned a blind eye to fantasy sports.

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ยป ProTrade update from The Electric Commentary ...
"I figured that they had probably copied a futures market model and that they would be OK under US la ..." [more] (Tracked on September 21, 2005 @ 11:06)
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