Prediction Market Site InTrade Bans US Customers

MyFirstNameIsPaul writes "In an announcement dated Monday, Nov 26, 2012, Dublin-based InTrade stated 'that due to legal and regulatory pressures, InTrade can no longer allow U.S. residents to participate in our real-money prediction markets.' The Washington Post reports that the Commodity Futures Trading Commission filed a complaint in federal court against InTrade for 'illegally facilitating bets on future economic data, the price of gold and even acts of war,' demonstrating just how far the long arm of U.S. law can reach."

Comments

Yes, a truly shocking abuse of gov't power.

[Anonymous Coward]

"InTrade can no longer allow U.S. residents to participate in our real-money prediction markets"..."demonstrating just how far the long arm of U.S. law can reach"

US law being applied to US residents?! Outrageous!

Re:Yes, a truly shocking abuse of gov't power.

[IamTheRealMike]

No, US law is being applied to a non-US company because they offered services to US residents.

In a sane setup, the US regulators would go and prosecute US residents who used illegal services, not foreign companies with foreign owners who are not in US jurisdiction. However, prosecuting lots of ordinary Americans is not politically attractive to these sorts of regulatory bodies, so they try and impose US law on foreigners instead. Now maybe these InTrade employees will have to avoid ever flying near the USA again in case their plane is forced to land and they're arrested.

Re:Yes, a truly shocking abuse of gov't power.

[Synerg1y]

The key word is right in the summary "pressure". Think of how MS packages windows for euro use, yep the door swings both ways. They didn't have to ban U.S. customers, but rather than dealing with the U.S. , they chose to do so, just like google, MS, and a plethora of other companies have in the past. This is hardly news.

Re:Yes, a truly shocking abuse of gov't power.

[MightyYar]

The US doesn't ban gambling, they protect the government's monopoly of it.

Re:Yes, a truly shocking abuse of gov't power.

[SydShamino]

Err, with rare exceptions, most national laws apply to people (citizens, residents, and visitors) within the national borders, but don't apply to people currently residing or visiting a different country. As a quick example, it's illegal for U.S. citizens, residents, and visitors to possess marijuana while in the U.S., but it's not against U.S. law for them to possess marijuana while in the Netherlands (unless Netherlands law makes it illegal).

So in this case, blocking by U.S. IP address effectively stops people in the U.S. from doing something illegal for people in the U.S. to do, while not preventing those in other countries (including U.S. citizens in other countries) from doing that same thing if it's legal where they currently are.

Re:Yes, a truly shocking abuse of gov't power.

[TubeSteak]

Since it's The Washington Post, they buried the lead at the very very end of TFA.

Monday's complaint includes charges that TEN violated that earlier settlement. The company used Intrade to offer illegal options including on the future prices of gold, changes in the unemployment rate and a measure of U.S. economic output, the complaint said. It said TEN failed to provide the pop-up notices mandated in the 2005 order.

Intertrade had already been charged with the exact same offense, had agreed to stop doing so, but didn't.
Somehow this is an issue with intrusive, authoritarian governments?

/And I don't think anyone is arguing that commodities futures should not be regulated, because they would be wrong.

Re:Yes, a truly shocking abuse of gov't power.

[dcollins]

"Err, with rare exceptions, most national laws apply to people (citizens, residents, and visitors) within the national borders, but don't apply to people currently residing or visiting a different country. As a quick example, it's illegal for U.S. citizens, residents, and visitors to possess marijuana while in the U.S., but it's not against U.S. law for them to possess marijuana while in the Netherlands..."

But the U.S. House of Representatives did pass a bill last year to reverse exactly that.

http://www.huffingtonpost.com/2011/10/06/us-drug-policy-war-congress_n_998993.html
http://www.govtrack.us/congress/bills/112/hr313

Re:Yes, a truly shocking abuse of gov't power.

[nasch]

Yeah it can be really inconvenient to go after the people actually breaking the law. Let's just go after the convenient targets instead, because law enforcement is hard!

Re:Hmmm ...

[LaminatorX]

The Feds' problem is that it's effectively a futures/options market in many respects, and such instruments are to be traded on regulated exchanges. Intrade is not so regulated, thus they are being excluded from the US market.

Re:USA citizens used to be first class

[Sique]

I have said it and will say it again. You with your vote (or your non voting) got the people into Congress who limited your ability to bet on future events. Don't complain about the laws Congress makes!

Good riddance!

[Anonymous Coward]

I, for one, am very glad these unlicensed options traders are getting stamped out! There's no room in the economy for these shenanigans! Just think what could happen if people started massively trading options on unregulated exchanges - people would start speculating, maybe betting on, say, housing prices going up or down, and before you know it, we could have a housing assets bubble that would burst, bring down the economy and require massive government bailouts! I'm so glad that options trading is restricted only to regulated, licensed exchanges where such things couldn't ever happen......

The lesson here is this: if you're a small person trying to speculate - that's bad! If you're a giant investment bank trying to speculate - go right ahead, just as long as your dealer^H^H^H exchange is "regulated".

Re:Good riddance!

[s73v3r]

I'm perfectly fine with the taxes being paid on only the profit. I'm just wondering why the hell simply having money to invest is rewarded more than actually doing work. Capital gains should be taxed at the same rate as ordinary income, if not higher. There is no reason whatsoever that we should be rewarding people for simply having money.

Re:How far is too far?

[timmyf2371]

InTrade is an Irish company, founded by an Irishman, with a HQ in Dublin. They also banned the use of US credit and debit cards in 2010 - so cannot be actively seen to be soliciting business from the US.

Considering these facts, I'm not entirely comfortable with an unrelated country being able to have such an impact on a foreign company, which only operates overseas.

Damn, this sucks

[Nidi62]

I had money down at InTrade betting that this was going to happen. Now how am I supposed to get my money!?

Re:Hmmm ...

[alexander_686]

To put a finer point on this, Standardized derivative contracts that trade on an exchange are heavily regulated. Option and future markets tend to be abused by inside traders, fast talking high pressure brokers, etc.

Most derivative contracts (by notional amount), however, trade OTC and are lightly regulated. Think SWAPs, CDOs, etc. However, the traders are large companies which are heavily regulated and are (supposed) to have sophisticated risk and capital controls.

Re:USA citizens used to be first class

[SaroDarksbane]

"Listen, the government gave you a choice between Goldman Sachs and Goldman Sachs in the last election, so you can't complain that Goldman Sachs is raping your future!"

Yes, that follows logically . . .

Re:Another stupid summary

[dcollins]

"So you think the US can stop you from purchasing wine while in Italy on vacation?... No, but that's an absolutely fucking retarded comparison. 1). Purchasing wine is not illegal in the US or Italy. 2). The transaction occurs on Italian soil, therefore the participants are subject to Italian law."

So do you think this bill passed by the U.S. House of Representatives last year (HR 313: criminalize any drug activity by U.S. citizens overseas, even if legal in the foreign country) is valid or not?

http://www.govtrack.us/congress/bills/112/hr313