Kalistan

[Doc]

Bookmakers Association gains approval for new Futures Exchange
Sulari Observers Market allows speculators to bid on Nations
Sulari, Duchy of Suldanor
June 12, 5715


Michael Millikin of the Kalistani Bookmakers Association

President of the Kalistani Bookmakers' Association, Michael Millikin announced that the Bookmakers have received regulatory approval of a new, alternative market in Sulari. The market, called the Sulari Observers Market allows speculators to place bets on nations in Terra. "The Observers Market will be governed by the Kalistani Bookmakers Association," said President Millikin. "The goal is to allow speculators to place money on specific international events, and the performance of countries in Terra. This new investment opportunity will give us real time data about how investors around the world view the operations of the nations of our world."

Millikin said that the Bookmakers Association have opened a new office whose aim is specifically to handicap the performance of nations. "Basically, an investor will make a bet that a country is on the upswing or on the downswing," said Millikin. "Each bet will come in the form of a contract: this is essentially futures trading, where the commodity is perception of a country's performance." Millikin said that the action is fundamentally similar to commodities speculative futures, where an investor bets based on where they think a specific commodity will be at when a contract is called. "Oil is a fantastic example. A speculator, when they put their money into futures, are betting on what the price will be in 6 months, when a contract is fulfilled."

There is a difference between a normal futures market and the new Sulari Observers Market. "In theory, you are basing your bets on what an actual commodity will be priced at in the future," said Millikin. "But in the Observers Market, you are betting against what other investors think. We've set the Observers market up as a parimutuel, similar to horse racing. Winners take their share of the final pot when the Contract is called- We'll have three, six and 12 month contracts, with the 12 month contract being the standard. So when I invest 1 peso betting that a country will on average, be better on a basket of scores, it will be matched against 1 peso that the country will be worse off. As money comes into the market, the moneyline will be adjusted to balance these wins and losses."

The Bookmakers role is to keep the bets balanced: If three times as many betters bet against a country as for it, the winner will earn their bet plus 300%. "We take our 4% vig off the top so we have no interest one way or the other on the outcome of the contracts," said Millikin. "We therefore gain an incentive to not only be transparent, but also to keep the balances public and up to date and provide for full collection and payout of all contracts."

Millikin said that this market should give a clear view of what investors think of any given country's performance. "If a speculator thinks a country is going to be worse off in the upcoming year, they will put their money behind the short sale. If they think it will be better, they will bet long. But publishing these results internationally should give nations a perception index, so they can see what actual money thinks of what they are doing." He stated that the market will be based on each investor's assessment of risk, and will be open to international speculators as well as domestic ones. "Volume will make it easier to correctly balance our books out."

Millikin said that the Observers Market required legislative approval from the National Government. "Kalistan doesn't tend to like pure speculation," said Millikin. "We had to structure the market so that money put up by poor folks who think that they can play in the market, only to find out that the market is and always has been rigged in favor of large investors. The parimutuel pits money against money: If a large investor comes into the market, it merely increases the size of the pool. So small investors will only be able to bet money they have, and stand to win significantly if they beat against a large bettor: the losses however are significantly smaller than in normal futures market."

The Bookmakers Association had to guarantee annual audits of all bets. "But in reality, we don't really have a lot of control over the odds: We merely need to make sure the books are balanced, and if they aren't we ourselves lose out. The contracts are paid at whatever the odds are at the time the contracts close, so we can't even fix those. The Association has a fiduciary responsibility to our members, and if we lose them money because we are paying out unbalanced contracts, we lose members. It is in our interest to be clean, transparent, and above board in our operations."

Millikin said members of the Association may not participate in the Sulari Observers Market, but anyone who can meet the minimum bid on the contract can get into the market. "We trade in Pesos, which may be the only thing that limits foreign participants, but it will be no problem at all for foreigners to change their own currency into Imperial Pesos if they plan to participate. The Sulari Observers Market will welcome that money as enthusiastically as money from the pockets of Kalistani investors." The Market will be overseen publicly by Her Imperial Majesty's Finance Ministry to ensure that all laws and investment regulations are being upheld.

Now that it has obtained regulatory permission, the Bookmakers will begin setting the Market up. "We've acquired a public building on Avienda Ava Marques in downtown Sulari to be made into the Brick and Mortar Exchange. There agents can take contracts from their clients, and bid contracts in real time. This is a very exciting time for the investment community in Kalistan." The Market is expected to open in summer 5716 and begin accepting futures contracts at that point.

@TheRepublic