In 1999, Irish entrepreneur John Delaney founded an online betting company. One of its websites focused on sports. The other, Intrade.com, would come to solicit wagers on everything else. Delaney’s idea was to provide people with a venue to bet on the outcomes of events that interested them, ranging from elections to the Oscars. Intrade was a predictions market, something originally developed by academics to gain better insight into human decision-making, but operated as a business.
Within a few years, Intrade amassed 25,000 users willing to wager money on whether Osama Bin Laden would be captured, the strength of the upcoming hurricane season in the U.S., or more mundane matters such as the Nasdaq close. The company attracted notable investors in its early years, including hedge fund billionaire Paul Tudor Jones.
From the beginning, U.S. authorities were wary about Intrade. Though it was based in Dublin, the company had a big U.S. user base. It shared a lot of similarities with online gambling, and because the company allowed wagering on stocks and commodities, some argued it was a financial exchange that required regulation. In 2005, the company actually applied through a subsidiary to the Commodities Futures Trading Commission in the U.S. to become a regulated exchange. A few months later, the CFTC fined Intrade $150,000 for offering commodities contracts illegally. Intrade continued serving U.S. customers.
The U.S. presidential election in 2008 proved to be a landmark year for Intrade. The odds it gave for candidates in the primaries and the election itself were regularly cited in newspaper articles and repeated by talking heads on cable television, drumming up publicity. Delaney boasted that Intrade’s prediction markets were a more reliable indicator of election outcomes than the opinion polls peddled by pundits, because his users were betting with actual money. “When you sit down in front of your Intrade account,” he said once, “who you might like to win is very secondary. Who you think will win, and generate a return for you, is the most important thing.” Intrade’s odds favoured Barack Obama to secure the presidency with 364 electoral college votes. He won with 365. Bloomberg Businessweek later called Intrade an “oracle among political pros.”
By 2011, it claimed to have more than 100,000 users and that it had transacted more than US$2-billion worth of betting contracts since 2001. Delaney, an adventurer at heart, attempted to climb Mount Everest that same year. He was thwarted once before by bad weather. This time, he collapsed and died less than 50 metres from the summit. His wife had given birth to their third child three days earlier, and she was waiting for his return to tell him.
Delaney’s death at age 42 was the first of many setbacks for the company he created. In 2012, the CFTC sued Intrade for offering futures and options contracts on an unregulated exchange, which forced it to stop serving U.S. customers. On March 10, Intrade announced on its website that it had ceased all trading activity. An investigation was underway that could uncover “financial irregularities” under Irish law, the update said.
It was later revealed that the company’s auditor had raised concerns about payments made to accounts in the name of Delaney, the company’s deceased founder. No one can predict when—or if—Intrade will resume operations. At the time of the shutdown, one of the most popular contracts involved the selection of the next pope. Intrade’s odds favoured Cardinal Peter Turkson of Ghana. On March 13, the Vatican elected Cardinal Jorge Bergoglio of Argentina.