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The selection of the next pope had been a hot topic on the site Intrade. That's where anyone can place real money bets on future events like the outcome of a presidential race or who will win an Oscar. But that all changed yesterday when Intrade abruptly halted trading, pending an unspecified investigation. NPR's Dan Bobkoff has that story.
DAN BOBKOFF, BYLINE: Little is known about what happened to Intrade. A statement on its website says it stopped trading due to, quote, "circumstances recently uncovered." It says these circumstances require immediate further investigation and may include financial irregularities. Justin Wolfers is an economics professor at the University of Michigan who studied Intrade extensively.
JUSTIN WOLFERS: I think everyone's surprised. The biggest part of the surprise is we don't yet know why it is that Intrade is shut down.
BOBKOFF: Intrade is what's known as a prediction market, where traders buy and sell contracts on anything from which presidential candidate will win Ohio to whether a country will go into recession this year. Real money changes hands and it's proven particularly present. Last year, it correctly predicted presidential election results in 49 out of 50 states.
WOLFERS: One of the reasons Intrade is so good is in fact that most of the alternative ways of predicting the future is simply so bad.
BOBKOFF: Wolfers says the wisdom of the Intrade crowd is most accurate when there's a lot of public information about a topic. But it wasn't 100 percent right.
WOLFERS: Most of the traders on Intrade thought that weapons of mass destruction would be found in Iraq. And, of course, we know they haven't been.
BOBKOFF: It's unclear if Intrade's shutdown is permanent. The company's announcement was vague about its future and it didn't respond to a request for comment. Intrade, which is based in Ireland, has been embroiled in controversy for years. Last fall, American traders were cut off after the U.S. Commodities Futures Trading Commission sued the service for making false statements and violating options trading rules. The CFTC says it was not involved in this weekend's events and its litigation will continue.
Robin Hansen is an economics professor at George Mason University. He says what made Intrade unusual is that it focused on socially relevant topics like foreign affairs and politics, not just sports.
ROBIN HANSEN: If we lose Intrade, we're losing a lot more than a place where a few people can have a little fun. We're losing a source of information, an independent, unusually reliable source of information on important public policy questions.
BOBKOFF: And with Intrade gone, at least for now, there's nowhere for traders to bet on whether the site will ever return. Dan Bobkoff, NPR News, New York. Transcript provided by NPR, Copyright NPR.