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Sox Are Up? Sell!

Web Sites Mimic Commodities Exchanges

By Ben White
Washington Post Staff Writer
Saturday, October 23, 2004; Page E01

Think you've got a bead on who will win the World Series that begins tonight between the Boston Red Sox and St. Louis Cardinals? Prepared to put your money where your mouth is?

Some fans would seek out their favorite bookmaker and take whatever odds are being offered.

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Others are taking the Wall Street approach and buying futures contracts on their teams of choice on TradeSports, an online exchange incorporated in Dublin, in part because of its favorable gambling laws.

TradeSports and similar sites pattern themselves on traditional commodities exchanges. But instead of an agreement to buy or sell a commodity at a specified price in the future, contracts on TradeSports are worth $10 if the event the contract predicts occurs. On Friday afternoon, a contract for the Red Sox to win was trading around 57, meaning the site's 43,000 members' combined offers to buy and sell were estimating that the Sox have a 57 percent chance of winning, compared with 43 percent for the Cardinals.

An investor who bought a Red Sox contract at 57, paying $5.70, would stand to make $4.30 on the contract if Boston wins the series.

Or, if Boston pulls ahead in the first couple of games and the price of the contract rises, the investor could sell and take a profit just in case the team collapses. A holder of contracts for the New York Yankees to win the American League Championship Series would have been wise to do this after the team went up three games to none against the Red Sox. But almost no one did, according to data from TradeSports. And for good reason. No team had ever come back from a 3-0 deficit to win a baseball playoff series, and the Sox have a long, painful history of losing to their Bronx rivals.

When the Red Sox lost Game 3, contracts for the team to win the series dropped to 2.5, or 25 cents. Anyone shrewd enough to buy stood to make $9.75 per contract.

Most traders, however, were like "Cisco," a regular poster on the site's message board. Even after the Yankees dropped Game 3, Cisco wrote that he was certain they would prevail.

"There is ONE FINAL PREDICTION that ole cisco will make in regards to 2004. The RED SOX will NOT win tomorrow," Cisco wrote.

Michael Knesevitch, communications director for Intrade PLC, TradeSports' parent company, said around 53,000 contracts traded hands during Game 7. The site sees its highest volume, around 100,000 contracts, during Super Bowl games.

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