US regulators asked to approve 2012 election futures market

With 2012 being a US presidential election year, a Chicago futures exchange is seeking federal approval to launch America’s first regulated political betting market. Long popular in other countries – including the UK, where punters splashed out record sums on the 2010 General Election – the US has never approved wagering on election outcomes. As with most wagering activities, American bettors have had to look beyond their borders – to Dublin-based Intrade, for example – to get their ballot betting fix. But if the North American Derivatives Exchange (NADEX) gets the nod from the Commodity Futures Trading Commission (CFTC), ‘political event contracts’ could be on the offing as early as Jan. 4, 2012.

The CFTC has 10 days in which to respond to NADEX’s request, but NADEX CEO Yossi Beinart doesn’t think there’s all that much to ponder, given that “the public will benefit” from the availability of such contracts. Speaking to BusinessInsider.com, Beinart made the point that “these contracts also provide a real time gauge of voter sentiment, which can be more valuable and more accurate than public opinion polls.” Indeed, a University of Iowa predictions market has proven to be more accurate than polls in forecasting US election results, mainly because investors/bettors are putting money on the line, not just expressing an opinion often based more on emotion than rationality.

But even if the CFTC approves, will US politicians go for it? With the glaring exception of its own financial markets — which, despite costing the average taxpayer several thousand dollars apiece in bailout funds, remain largely free to do as they please – America has proven especially squeamish when it comes to anything that might open the door to tampering. In 2010, the CFTC approved Cantor Fitzgerald’s application to trade futures contracts on movie box office results, only to have a skittish Congress insert a retroactive ban on the practice into a financial reform bill a month later.

Recent headlines from Asia may also affect the election futures bid. Police in Taiwan are aggressively cracking down on gambling operators taking bets on that country’s upcoming presidential election. The cops claim their efforts are designed to “prevent gambling from affecting public order or voting behavior.” Wang Cho-chun, Director General of the National Police Agency, has even announced that bookies taking election bets are to be treated as organized crime suspects. On Friday, TaiwanNews.com reported that two bookmakers were arrested in the southern part of the country for taking roughly US $33k worth of bets on the Jan. 14 election. These bookies are reportedly being pressed to cough up the identities of their bettors, meaning further police actions are imminent.

So will the US join the ranks of the UK and other less-hysterical nations who have learned to live with election wagering, or will the US prefer to stick with their crackdown-happy compadres in Taiwan? If only there was some way to wager on this question…

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