Intrade, a popular online trading exchange, provides a platform for people to wager on whether or not future events will happen. More than 21,000 people have put money on the following: "The U.S. Supreme Court to rule individual mandate unconstitutional before midnight ET 31 Dec 2012." As of this writing, Intrade gives a 74.4 percent chance that the mandate will be struck down.
The Dublin-based site lets individuals buy shares if they think an event will happen and sell if they think it won't. Events have defined end points. For example, if the Supreme Court rules the individual mandate unconstitutional, all shares will jump to $10 each and shareholders will be paid. If the opposite ruling is handed down, the shares will settle at $0. The site posts a probability of an event happening by converting share prices into a percentage. When shares of the Court's ruling were selling at $7.81 per share, the probability was 78.1 percent.
The Supreme Court ruling event is one of the most active on the site this week. Other hotly traded markets are "Barack Obama to be re-elected President in 2012," a corresponding market for Mitt Romney, and "Will the U.S. economy go into recession in 2012?" The site goes beyond politics, too, speculating in categories such as climate and weather. For example: "Arctic sea ice extent for Sept. 2012 to be less than 4.3 million square kilometers." Entertainment is fair game as well: "The Dark Knight Rises to gross OVER $175.0M in opening weekend."
Bettors on Intrade took a stab at the outcome of the U.S. presidential election in 2008, predicting electoral college votes almost exactly: They missed one of Nebraska’s votes, and forecast that McCain would win Indiana and Obama would take Missouri.* The two states each went to the opposite party, but their electoral vote tallies canceled out and InTrade’s prediction was nearly spot on. The site also boasts 97.89 percent prediction accuracy for the 2012 Academy Awards. For the movie industry’s big night, bettors traded almost $1.3 million and the winningest individual made $22,133.
Will the site’s Affordable Care Act prediction hold true? Less wager-happy spectators can simply await the court’s decision.
Image: Dice via Wikimedia Commons
*Correction (06/26/12): The original sentence was edited after posting to correct an error.