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> For 96¢ you could buy a dollar I'm skeptical of this because Withdrawals are subject to a 30-day holding period after your initial deposit and a 5% processin
by conistonwater 6y ago
> For 96¢ you could buy a dollar
I'm skeptical of this because Withdrawals are subject to a 30-day holding period after your initial deposit and a 5% processing fee. (https://www.predictit.org/terms-and-conditions https://www.predictit.org/terms-and-conditions) If people have trouble getting in and out of trades those are the situations in which you expect market prices to be somewhat wrong. 5% is actually spectacularly high in most situations, imagine how much of an edge you need at predicting to beat that.
The price on predictit was ~85c for a very long time after the election. But it's not necessarily because people are unreasonable, there are limits of arbitrage as well. In order to make any profit at all you'd need to lock up a sizeable chunk of money, say $1000, for something like a month, pay 5% commission, plus I imagine the hassle of it all, and all you get is a few dollars. In economics literature things like this are described as limits of arbitrage, to explain situations (like deep out of money options) where it seems like an arbitrage opportunity exists but where everyone still thinks it's a bad trade.
- ballenf 6y agoYou also have the non-zero risk of the site shutting down. Predict-It's been around a long time now, but I still wouldn't wire them more than I could afford to totally lose. 4% on what I can afford to lose really isn't worth the hassle.
- tialaramex 6y agoI haven't checked for PredictIt since I am not an American and can't bet there. But the usual financial construction for a betting market where you can take both sides is the same as for a law firm, or a share dealer, all your money held by them is legally separate from their money so even if they get into horrible debt problems their creditors have no possible claim to your funds and you just get it all back in a few weeks after the paperwork is done. It's clearly not as truly safe as government bonds or insured savings where the government is ultimately on the hook to make you square - but it's pretty safe. I wouldn't put next week's rent money (if I rented) on "Trump lost the election" at PredictIt. But money put aside for the new car, for next year's vacation or for a birthday gift in February? No sweat.
- conistonwater 6y agoBut predictit is not a usual financial construction. For example, the first thing it says is: > PredictIt is intended and offered as an experimental research and educational facility of Victoria University of Wellington, New Zealand (“Provider” or “We”), not as an investment market or a gambling facility. PredictIt is not regulated by, nor are its operators registered with, the U.S. Commodity Futures Trading Commission (CFTC) or any other regulatory authority. I don't know precisely what that means for segregation of funds, but I don't want to just assume they work the way I would imagine them to work.