Tuesday, January 19, 2010

Intrade Wants You to Find and Benefit from Arbitrage Opportunities

It is the season to hunt for risk minimizing profit opportunities on Intrade and on and across other prediction market platforms. We would like to incentivize you to find, highlight and remove these market anomalies.

Periodically arbitrage opportunities exist on Intrade and other prediction market platforms. Arbitrage trading is a risk minimizing strategy that by definition should be “no-gamble”.

To encourage you to profit from these irregularities we will make sure our fees are no obstacle. We are offering all members the ability to execute arbitrage trades entirely on Intrade at zero fees for those trades.

Additionally any member who can find and execute an arbitrage trade between Intrade and any other platform should submit proof after the trades are completed. Once reviewed if our fees have caused the return on your trades to be negative we will refund upto 100% of our fees on such trades. We would encourage other platforms to consider offering the same.

Sometimes people identify arbitrage opportunities but are not in a position to execute the relevant trades. We have created a new thread here (see T&C's) where such arbitrage trades may be logged.

Anyone who does find and highlight to the public such an opportunity and does not execute the relevant trades themselves will earn our thanks, plus a $20 trading credit (and will probably increase the predictive accuracy of the market) if the trades are executed by a trader. Markets that are bid to over 100 or offered at less than 100 for mutually exclusive events do not necessarily qualify for a trading credit.

Fee incentives will be posted to your account after request to help@intrade.com and submission of relevant supporting information.

We hope and expect that people will develop simple price reading and price comparison robots to search for these opportunities. If you are a developer but not a trader and you have such an application or would like to create one, please contact me on john.delaney@intrade.com as we may be able to help you get started with API assistance and support.

Terms and conditions will apply to this offer, but no sneaky ones. Please see our Forum for T&C's.

Traders please take note: All profit and loss risks associated with all trades including trades and traders that attempt to benefit from this offer reside with the trader absolutely and not Intrade. In the event that a trader suffers losses in pursuing an arbitrage strategy for any reason (such as but not limited to a market rule change, one contract in a group being voided or unwound, the platform becoming unavailable, rule changes or differences on Intrade or across platforms, inability to complete the hoped for arbitrage or any other reason whatsoever) Intrade will not entertain, accept or otherwise enter correspondence about any losses as the risk will reside absolutely with the trader.


Intrade said...

kentog said :

    Would you consider an arbitage situation if the 2 main candidates do not add up to 100%, even though there might technically be a third candidate, or an "other" option trading at "0"? For example, in the Mass race, teh numbers do not add up to 100 between the top 2, but there are technically other candidates.

John Delaney CEO Intrade.com said...


Unfortunately we cant offer this due to the remote chance that a "black swan" event could occur.

Intrade said...

coldsquid said :

    So we get $20 every time we post a message that the sum of all percentages for a given auction is above 100%? Because the sums of the MA race currently exceeds 100%. Guaranteed win selling 847 Coakleys and 178 Browns, no, when priced at 84.7 and 17.8?

Intrade said...

John Delaney, Intrade said :


Markets that are bid to over 100 or offered at less than 100 for mutually exclusive events do not qualify for a trading credit.

Intrade said...

trader1234 said :

    I would seriously caution Intrade against this because of differing rules on different exchanges. What would on the surface appear to be a risk free bet on identical scenarios can easily be sideswiped by a minor rule variation that nobody notices. The losses can be "massive" in such a scenario. Intrade could be betting its existence on the arbritrary rule decisions of another exchange.

Intrade said...

trader1234 said :

    For example, on Intrade contracts can over time have minor rules added that nobody expected at the beginning, changing the nature of the contract itself. This also occurs on other exchanges who over time add and post rules to clarify the nature of the event.

Intrade said...

trader1234 said :

    Also, what would the benefit be of advertising another website? Volume on Intrade would be hurt if people decide to open another account at the competing exchange.

Intrade said...


Concerning a possibility like or related to the one you note this offer does not infer or guarantee in anyway that markets on Intrade let alone on other platforms are fungible and/or off setting.

The risk that you have identified that “on the surface appear[s] to be a risk free bet on identical scenarios can easily be sideswiped by a minor rule variation that nobody notices” is a risk that the trader must assume whether it is on single trade or multiple trades executed on one or many platforms in pursuit of a risk free arbitrage. Should such an unfortunate situation occur, Intrade would not be exposed in any way as our members must have sufficient funds in their accounts to cover their worst case loss.


John Delaney

Intrade said...

trader1234 said :

    I post my comments only out of concern for Intrade.

The problem is that in the unlikely event in which a trader loses a substantial amount of money on a flawed arbritrage for any reason, they will likely blame Intrade.

Whether it be an offsetting bet gets cancelled or is already taken by someone else, or Intrade's site becomes unavailable, rule differences, etc.

Intrade said...


Thank you very much for your concern.

To minimize the possibility of any issues along the lines you identified we will add a line to the announcement.

Again, thanks for your comments and concerns. They are appreciated.


Intrade said...

ellingson said :

    I think I found an arb on paddypower for the Rep nominee they have Palin at 5/1 which is 16.7 as a percentage and you can sell at intrade for 17.6 right now. Also they have Pawlenty at 10/1 which is 9.1 and you can sell at intrade for 10.3. I hope this helps someone make some money and was what you were looking for.

Intrade said...

John Delaney said :

    Thanks for the suggestion eelingson.

Intrade said...

querulous said :

    I arbed the 2010 House midterms market for a HUGE six cent profit - do I need to do anything or does the system take care of it for me?