14 Geo. Mason L. Rev. 227 (2006-2007)
Of Bookies and Brokers: Are Sports Futures Gambling or Investing, and Does It Even Matter

handle is hein.journals/gmlr14 and id is 235 raw text is: 2006]

OF BOOKIES AND BROKERS: ARE SPORTS FUTURES
GAMBLING OR INVESTING, AND DOES IT EVEN
MATTER?
Christopher T. Pickens*
INTRODUCTION
You are in the midst of a trading pit on the floor of the exchange. In
the controlled chaos around you, other buyers and sellers are shouting and
raising their hands to get the trader's attention. The trader acknowledges the
seller on your left and buyer behind you, and all three scribble furiously in
their notepads. You are anxious to buy your contracts because the price is
rising and reducing your prospective return. The trader shouts, Redskins at
twenty, you raise your hand, he points to you, you write down the trade,
and move off to trade in the Cowboys pit.
The exchange just described is a form of information market. Informa-
tion markets facilitate the trading of contracts whose values depend on the
occurrence of an uncertain event.1 A sports future is such a contract in
which the uncertain event is the outcome of a sporting event (e.g., football
or baseball game). Those who successfully predict the future earn positive
profits in these markets. Many academics believe that these profits encour-
age traders to find and act on superior information, and that the market
price will reflect that information to give an accurate prediction of an
event's outcome.2 There are more than twenty-three information markets
operating on the internet, not all of which trade on sports.3 Empirical evi-
* George Mason University School of Law, Juris Doctor Candidate, May 2007; Articles Editor,
GEORGE MASON LAW REVIEW, 2006-2007; Washington & Lee University, B.S., Business Administra-
tion, June 2003. I would like to thank Professor Joshua D. Wright for countless helpful comments on
earlier drafts of this Comment. I would also like to thank my family and friends for their grammatical
excellence and support. All mistakes are entirely my own.
I Robert W. Hahn & Paul C. Tetlock, A New Approach for Regulating Information Markets, 29
J. REG. ECON. 265, 265 (2006).
2 Id. at 266; see also CBS Sunday Morning: The Crowd Knows Best (CBS television broadcast
Jan. 8, 2006), available at http://www.cbsnews.com/stories/2006/01/08/sunday/printable 185604.shtral
(quoting Harvard Business School Professor Anita Elberse as saying, One expert will never know as
much as a group of people).
3 Hahn & Tetlock, supra note 1, at 266; cf Robin Hanson, Could Gambling Save Science? En-
couraging an Honest Consensus, in GAMBLING AND COMMERCIAL GAMING: ESSAYS IN BUSINESS,
ECONOMICS, PHILOSOPHY, AND SCIENCE 399 (W. Eadington & J. Cornelius eds., 1992) (proposing an

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