Gambling News - June 2005 Edition

"Betting on Social Security. Literally"

Want to place a bet on the outcome of the debate on the anti online gambling laws?

The average person must surely have enough to think about in the ongoing heated debates between the Democrats and the Republicans on the matter of Social Security reform but it seems that this is not the case. There are people who think about the topic so much that they are now wagering on how and when the issue will be resolved. Intrade, an online futures market based in Dublin, Ireland, lists three futures contracts that allows traders to bet on whether a law will be passed that will let workers in the U.S. move part of their Social Security taxes into individual investment accounts.

Traders bet on whether they think a law permitting the individual investment accounts will be passed by December 31, 2005 on the first contract. With the second contract, traders bet on whether the law will be passed by June 30, 2006 and the third contract is for those who wish to wager that the law will be passed by December 31, 2006. So far, most of the wagers placed don’t favor the individual accounts. Traders see only a nine percent chance of the law passing by this December. They give passage by June 30 of next year a 21 percent chance and passage by December 31, 2006 received a slightly higher chance of 27 percent.

Anyone living in the United States, however, should think twice before placing an online wager over Social Security reform, or any online wager for that matter. Internet gambling is banned under the 1960’s Wire Act and is illegal in the United States. According to the former director of the New Jersey Division of Gaming Enforcement, Frank Catania, who is now a consultant to the online gambling industry, the whole Internet gambling issue is a “gray area”. He points out that not all legal analysts believe the Wire Act covers Internet gambling since the law was introduced long before the advent of Internet gambling. The legal status of Internet gambling is further clouded by the fact that some states have a clear and outright ban on online gambling while other states do not.

For anyone doubting the predictive powers of futures wagering, he should check carefully. Look at these examples: a day before the presidential election, traders with Intrade correctly predicted that George Bush would win the election. They also correctly predicted results for fifty states including the District of Columbia. Traders also correctly predicted the winners in 33 out of 34 Senate races. And if that isn’t enough, traders accurately predicted the winner in the papal elections two days before the official announcement.

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