What Killed Intrade?

On Sunday night, Intrade, the online-prediction exchange that became famous during last year’s Presidential election, said that it was closing down forthwith following the discovery of “financial irregularities.” But what were these irregularities? Intrade didn’t say. But citing Irish law—Intrade is legally domiciled in the Emerald Isle—it said that it had been obliged to halt trading on its Web site, close out its customers’ accounts, and “cease all banking transactions for all existing Company accounts immediately.”

Obviously, the big story would be if Intrade, or the authorities, had uncovered efforts to corner one or more of the prediction markets on the electronic exchange, which allowed people to bet on everything from the weather to the Oscars to politics. During the Presidential contest, there were rumors about efforts to manipulate Intrade’s election market, which many journalists, myself included, monitored closely to see how investors and bettors were viewing the chances of Barack Obama and Mitt Romney. For example, after the first debate, in which President Obama did badly, the estimated probability of him being reëlected fell sharply on Intrade—more sharply than could easily be justified on the basis of one off night—prompting some dark mutterings that Romney supporters might have been trying to ramp the market.

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