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If you enjoy the content at iBankCoin, please follow us on TwitterYesterday on Breakout we featured Yossi Beinart, the CEO of a company trying to get CFTC clearance to legalize the trading of futures contracts on the outcome of the 2012 elections. Beinart’s firm would allow traders to, in effect, wager on the winner of the Presidency as well as control of the House and Senate.
Suffice it to say Beinart’s is a controversial idea.
I sat down with my co-host, Matt Nesto to debate the merits of “wagering” on political events in general.
Taking the con side of the debate, Nesto’s arguments are as follows:
*The CFTC has a spotty, at best, record of regulating the markets that exist today. They have enough to do without adding a gimmick like election futures.
*Capping the nominal value of contracts purchased at $250,000 in itself invalidates the argument of the trading activity adding any economic value. Firms looking to “hedge” various outcomes need a much higher limit to impact their economic fate. Individuals have no way to justify bets of a quarter of a million on election results.
*There’s no economic need being met here; it’s simply wagering.
WTF – this is the one thing they seek to regulate? Who cares if it adds no value, driving up commodity prices doesn’t either, but if people want to gamble like degenerate madmen let them. Capitalism ftw.
The only thing this is going to do is give Congressmen and Senators another avenue for profit. Pre-knowledge of who is going to drop out and announce support for someone else is the only thing that will drive volume here.