Facing charges, Intrade bars U.S. customers

U.S. regulators have alleged that Intrade, the online

U.S. regulators have alleged that Intrade, the online prediction market, illegally facilitates bets on future economic data, the price of gold and even acts of war. (Credit: iStock)

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Intrade, the online prediction market, shut itself to U.S. customers Monday after regulators charged it with illegally facilitating bets on future economic data, the price of gold and even acts of war.

Hours after the Commodity Futures Trading Commission filed a complaint in federal court, Intrade announced on its site that it could no longer allow U.S. residents to trade "due to legal and regulatory pressures."

U.S. residents must begin closing their accounts and withdrawing their funds immediately, the website said. It said customers must resolve open predictions by Dec. 23 or the site would assign them "fair market value" and close them.

The CFTC's civil complaint charged Intrade, based in Ireland, and its operator solicited customers to trade investment contracts that technically are options, which must be traded on approved, regulated exchanges.

"Today's action should make it clear that we will intervene in the 'prediction' markets, wherever they may be based, when their U.S. activities violate" laws and rules enforced by the agency, said CFTC enforcement director David Meister.

By requiring that options be traded on approved exchanges, Meister said, regulators can "police market activity and protect market integrity."

Intrade did not respond to an emailed request for comment.

It was unclear whether regulators believe that all trades on Intrade by U.S. investors are illegal. The CFTC said it would not comment further because the matter was in litigation.

Intrade is known for facilitating bets on award shows, weather and most recently on the presidential election. For example, Monday the site assigned a 19 percent chance the United States or Israel would launch a strike against Iran by June 30.

The CFTC oversees markets for futures and options, investments that allow bets on the future prices of commodities. Those contracts help businesses protect themselves against unexpected price swings.

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