Gambling with bitcoin: Website lets Americans gamble

The electronic money bitcoin used to facilitate drug deals that are on-line seems to be empowering visitors to avoid regulations prohibiting on-line gaming.

Predictious.com, a fresh business from Ireland, offers a “prediction market” that enables individuals to bet on everything from the U.S. presidential election to the Olympics and the Oscars. And it is all made possible by bitcoins.

Wagering of the form is a legal gray area in the U.S., where the national Commodity Futures Trading Commission (CFTC) determined in a 2012 regulatory order not to permit prediction markets on the grounds that they’re “contrary to the public interest.”

The CFTC recently sued the popular prediction market Intrade.com for running with no permit, which induced the website to shut down.

Predictious.com, which began last July, has the exact same version as Intrade – except that it takes only bitcoins, letting it receive resources immediately from Americans despite regulations that prohibit banks to transfer cash to it.

‘The public won an extremely small number and bet on the Seahawks.’

Bitcoins are virtual money unconnected to any nation, unlike every other money on world. It does not have any physical form in paper or coin; instead computers “mine” bitcoins by creating new ones at particular durations and depositing them into virtual bank accounts.

It’s not as sure that the CFTC will go after one while it prohibits prediction markets that use cash.

“There isn’t any way I could reply [that]. Too high risk for prediction,” CFTC spokesman Steven Adamske told.

Meanwhile, three thousand individuals on Predictious.com are using bitcoins to bet on everything from politics to entertainment. The website’s bettors indicate the film “12 Years a Slave” has a 60 percent probability of winning Best Picture; that Republicans have a 50 percent probability of taking the Senate in November; that Hillary Clinton has a 33 percent probability of becoming president in 2016; and that the U.S. has about a 50 percent probability of winning the most medals in the Sochi Winter Games.

The creator of Predictious.com, software developer Flavien Charlon, said he constantly wished to make a prediction market, and that bitcoin solved the issue of transferring cash.

“With most of the legal issues and regulations, that caused it to be extremely difficult to take up a prediction market. Nevertheless, as soon as I learned about bitcoin I thought: ‘that is the best thing.’ Nearly right after I found bitcoin, I began to work with this job,” he said.

Some Americans are not unhappy to really have a spot to gamble online, as you can see easily at the number of bitcoin casinos on this website.

“I used Predictious to bet on the Super Bowl. I bet on the Seahawks and won an extremely small number of bitcoins,” Eli Dourado, a technology policy research worker in the Mercatus Center at George Mason University, told.

He explained that such marketplaces will not be bad for society.

“This is useful advice the people should be free to get… Within a political campaign, you might not find out how you can weight the various surveys that come out, or the best way to interpret the bluster that comes from each side, but the market price of every nominee on any of the websites represents a summation of what individuals who will willingly place their particular cash on the line consider.”

That’s not how matters are seen by the government.

“[Prediction markets can] have an undesirable impact on the ethics of elections, for example by creating financial incentives to vote for specific candidates even when this kind of vote might be contrary to the voter’s political viewpoints,” the 2012 CFTC order reads.

Some prediction market specialists, noting the law usually doesn’t define what money can be used, are cautious about whether government regulation can be efficiently escaped by gambling with bitcoins.

“I am quite certain that one can not evade gaming or securities or commodities regulations by trading in francs or yen instead of dollars,” said Robin Hanson, an economics professor at George Mason University and the chief scientist at Consensus Point, which designs prediction markets that firms use to reach internal choices.

Hanson can also be doubtful regarding the recent prediction market’s range.

“You had need the cash was once something readily accessible to a lot of prospective users,” Hanson said. “At the present time, bitcoin does not seem so great on that.” On the other hand, many professional poker players are moving into bitcoin.

“Once regulators determine the trades are illegal they’ve a lot of things they may do to shut it down. Witness Silk Road,” Hanson added, referring to the on-line bitcoin-only drug marketplace that lived anonymously for many years until the FBI identified the originator.

Irish regulators have up to now been excellent, although Charlon said regulation is a concern. Prediction markets and gaming are legal.

“Irish regulators do not have any guidelines affecting bitcoin yet. When they do begin to appear with them, we will use to proactively work together,” Charlon said.

Predictious.com remains little; Charlon said the entire sum of bitcoins that customers have sent to the website will probably be worth around $500,000.

But Dourado is not hopeless .

“The demand to make use of the banking system meant that it had been comparatively simple for the U.S. government to control Intrade,” he said. “It remains to be seen just how much effort the government may wish to spend money on restricting bitcoin-based prediction markets, but since these markets could produce lots of worth, I expect we can all really come to a live-and-let-bet arrangement.”