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Sulari Observers Market to expand operations
"Predictions Market fit in with Futures Model" says Millikin
Sulari, Duchy of Ananto
August 18, 5717


Events futures began trading in Sulari Observers Market on Aug 1

Michael Millikin, President of the Kalistani Bookmakers' Association announced a much anticipated expansion of the Sulari Observers Market establishment this month. "We've added pure Events Futures to the Sulari Observers Market," said Millikin. "It seems that what we began with the Observers Market naturally lends itself to a predictions market: We essentially ask the same sorts of questions: In the Nations Market, we ask will the nation improve or worsen, and the contracts are settled at whatever they end on when the term closes, determined by the parimutuel. But the Observers Market is kind of a hybrid between a commodities future market and a prediction market. Adding a pure, straight betting market based on set dates and events, whether they happen or not, seems like a perfectly logical step to include into the Market we have set up here."

The Events Futures exchange follows the same regulatory regime as the Observers Market, but rather than betting for or against the improvement of a national or regional Index, the events futures bets against whether a specific discrete event will happen. A bettor may purchase a "contract" for or against a specific event for a set amount, that usually equals anticipated probability of that event happening, and when the contract closes, usually when the specific event is anticipated, winning contracts will pay 1 Peso each per winning contract, while losing contracts will lose all of their money. "We make our 4% when the person buys the contract, so if the contract is selling at this moment at 30 cents, it will cost the bettor .312 cents to purchase the contract. We eat the rounding errors, of course." said Millikin. Each day, the price of a contract will change, and a bettor may buy or sell their contract at any time before close at whatever the contract is currently priced at. "They only pay the vig when they buy the contract," said Millikin. "We don't charge it again when they cash it in. This way the Bookmakers Association has no financial interest whatsoever on the outcome of the contract."

Unlike the parimutuel, the money in the events futures does not need to be balanced wins against losses. "In parimutuel, like the Observers Market, we need to keep our books balanced, to ensure that we will make our vigorish under any circumstances," said Millikin. "We do that by adjusting the moneyline to attract more bets during the betting period, and then we pay out based on whatever the contract was when it closed. In the Events futures, we don't need balanced books, because the bettor put their money up against one another on specific events. We have the latitude, therefore, to maintain unbalanced books, and can adjust our contract pricing over time to reflect the money coming in on either side of a question rather than trying to produce our odds to keep our risk mitigated. The price throughout the day is discovered by the trade volume, rather than set to try to draw more money to one side or the other. In this sense, then the final settlement of the contract is more a reflection of the mind of the participant rather than the bookmakers."

Millikin said the new Events Futures Exchange which will be part of the umbrella Observers Market will focus specifically on probability rather than information based bets. "We want to try to ensure that insiders who have the ability to exploit their secret knowledge do not have a place in these operations," said Millikin. "So the Events Futures Exchange will focus on events where the outcome is considered random and unknowable when the contracts are created, where individuals cannot directly affect the outcome of the contract. Things like climate events, things like stock market crashes, things like new inventions, things like this, discrete events that may be observed with publicly available information sources." Millikin also said that positions will be limited to discourage positions by large institutional investors who are themselves likely to have inside information. "If we limit positions initially to about 50K per question, we will definitely drive the sharks away who seek to gain by exploiting their own knowledge, ensuring that the market stays more about forecasting and less about unfair advantages that inside information provides."

Millikin said the Events Futures Exchange will ultimately look more similar to a game of chance than to anything resembling a legitimate career. "Sure, there are professional gamblers in Sulari," said Millikin. "We have guys who come to the track everyday except when its raining, and then they go to the Parlor. That's fine. But events prediction aims to be a fun way for people to test their forecasting chops against other players, and maybe make a bit of money along the way. And really, that's a fun thing in and of itself." Millikin said that the Observers Market will also include information on the top moving positions, so that people may purchase contracts in person while in Sulari, but he also said that the Observers Market is launching an app later this year which will allow those who cannot make it to Sulari to still participate in trading. To this end, The Observers Market has recently remodeled its Exchange in downtown Sulari to include a new Events Futures parlor.

"We want the app to be available internationally, for sure," said Millikin. "We are currently working with ForIn to begin accepting and paying out in foreign currency for international participants. There is no reason Kalistan shouldn't see to offer our gaming services to other nations, especially those nations whose governments do not provide them with opportunities to participate in predictions contracts domestically."

@LaModa