Important Site Announcement: Please Read.

The team at iPredict are sad to announce that due to regulatory hurdles we must suspend operations in New Zealand.

The full text is here and pasted below:

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Over the past seven years, the team at Victoria Link have been running New Zealand's only prediction market, iPredict. It is one of only three "commercial" prediction markets operating globally. We've really enjoyed turning it from research into a practical tool which has become part of the New Zealand political narrative.

Prediction markets function based on the assumption that people will be more accurate when they back their opinion with money. There is a wide academic field studying this, and it could one day result in more accurate forecasting of a huge variety of events and even change how governments make decisions.

As prediction markets do not comfortably fit within any existing regulatory boxes, we have been working closely and positively with the Financial Markets Authority (FMA) to enable us to operate economically within the financial market regulations.

Regrettably the Ministry of Justice has not been so positive. We applied for an exemption from the Anti-Money Laundering and Countering Financing of Terrorism Act. We believed we would secure an exemption due to the limited possible investment into iPredict trades and the small nature of the Prediction market transactions.
Our application has been declined by the Minister, Simon Bridges, on the grounds that we are "a legitimate money laundering risk". This is essentially because we have no customer due diligence checks. He considered the level of regulatory burden is proportionate to the risk. He formed these views without any discussions with us.

We are an academic not-for-profit organisation and our agreement with the FMA dictates we place caps on transactions. For example, over the past seven years, we have handled a total of 3,782 withdrawals, with an average trader net worth of $41. Our withdrawal process is lengthy and we are a low risk of money laundering.
Because the cost of compliance is too high, we are forced to wind up operations in NZ. We are looking into the possibility of transferring our prediction activities to be included on PredictIt in the US, but this could take months to work through the regulatory requirements.

From now on, we are unable to take further deposits, sign ups or place new prediction stocks. We will continue existing stocks and you can continue to trade them.

We hope you will stay with us and transfer to PredictIt when we have the necessary approvals. However you may at any time sell down your stocks and withdraw your cash. All your funds are held in Prediction Clearing and these funds cover all our obligations. Anticipating higher than normal demands for withdrawals, our usual processing schedule will need to be suspended and withdrawals will be processed on a first come first served basis.

As an alternative we would be delighted if you chose to donate your remaining funds to further the beneficial research Victoria University of Wellington is conducting into prediction markets, or education research at the university.

It's been a whirlwind seven years, and we'd like to thank our fantastic community who have kept coming back to the site and our fantastic team who have managed and developed the site over the years.

I appreciate all the work you guys have put into iPredict over the years.

Often without the thanks that you deserved.

Tough break; Sorry, guys - and ditto to LAX - "So long and thanks for all the fish!"

Very sad news. Thanks for all the effort to date.

Practically, how are you going to deal with stocks that are several years out?

Let me get this straight, shut down Ipredict because of the money laundering risk of less than 1000 people trading penny stocks.

Meanwhile turn up in Auckland from China with a suitcase of money to invest in property, no questions asked!

The Minister will be hearing from me.



Edited 1 time(s). Last edit at 11/26/2015 12:18PM by TraderV.

"iPredict. It is one of only three "commercial" prediction markets operating globally"

Does anyone know the third? iPredict (RIP), PredictIt, annnnd ....?

Very sad news.
Hard to fathom this decision, which has been made without any consultation.
Another arrogant politician pulling rank.

How long will we be able to continue trading? Some of the stocks (e.g. DPRK stuff) are not due to close until several years in the future. Will there be a final settlement for outstanding stocks at some point?

What would we each need to chip in to cover the compliance cost?

This is unbelievable.

It's a damn shame, but it is believable - traders like futures, reactionary politicians do not:

[en.wikipedia.org]

This really pisses me off. Words cannot describe how disappointed I am about this shallow and meaningless decision

Maybe issue one (just one) last, final contract: "Simon Bridges to develop raging hemorrhoids by 01 Jan 2017"?

DrPierreHazedoneas Wrote:
-------------------------------------------------------
> Maybe issue one (just one) last, final contract:
> "Simon Bridges to develop raging hemorrhoids by 01
> Jan 2017"?


Could be a difficult one to verify.

Dear friends at iPredict

Just considering a possible solution to the problem:

1) Each current / new member pays a one-off membership fee of (say) $20 to join. Users who opened multiple accounts would have to pay $20 for each account, which should discourage the practice. There would be a further fee of $5 per annum, deducted from each user's account at the start of each year. This money raised would allow iPredict to staff a "verification" service to oversee member details.

2) Only traders with a NZ-domiciled bank account are permitted to be members. NZ banks require new account-holders to provide full ID details. This would effectively eliminate the risk of money-laundering.

Feedback and suggestions welcome.

I'm happy to chip in.

My letter to Simon Bridges (thanks Spartan for the two ideas)

Dear Hon Simon Bridges,

I am writing to you to urge you to reconsider your decision to not allow iPredict an exemption to the anti-money law requirements.

The funds that are permitted to be deposited into iPredict to trade with, are such a small amount that one would have to have hundreds of accounts to move any meaningful amount of currency. This would not only be time consuming, but also very inefficient to establish this number of accounts to move any meaningful amount.

Instead of taking the easy way and forcing iPredict to close down, why not attempt to work with the Non-Profit, University run organsation and its members to come to a solution? The members are very passionate about iPredict and would be willing to make comprises in order to see the site continue.

Here are two simple steps suggested by a user of iPredict that could be implemented:

1) Each current / new member pays a one-off membership fee of (say) $20 to join. Users who opened multiple accounts would have to pay $20 for each account, which should discourage the practice. There would be a further fee of $5 per annum, deducted from each user's account at the start of each year. This money raised would allow iPredict to staff a "verification" service to oversee member details.

2) Only traders with a NZ-domiciled bank account are permitted to be members. NZ banks require new account-holders to provide full ID details. This would effectively eliminate the risk of money-laundering as the banks the account is with would have already done their due diligence.

I urge you to reconsider your decision as a heavy handed blanket approach never works and will only stifle innovation in the finance industry - an industry that is already extremely saddled with regulation, which as seen little to no innovation in the last 50 years. This strangle hold is now flowing over to a hobby industry that this regulation was never intended for.

Best Regards,

Robert Davey

Mt Maunganui

Concerned citizen who see the governments power is ever increasing to the detriment of our liberty.

The problem with allowing bank transfers only over allowing credit card deposits is that it messes up the ability to quickly put in some cash when you see an arbitrage play or a price that's just out of whack. By the time the bank transfer clears, the opportunity could be gone. No?

As I understand it, in a slightly different situation, IRD are making overseas entities provide a NZ bank account number. Not principally to transfer money into and out of but rather to prove that the overseas entities have been subjected to checks under NZ Anti money laundering legislation.

Again my understanding was the NZ bank account could be closed immediately after the proof was given as far as IRD was concerned. So your credit card would be fine, once you have proved you had a NZ bank account.

Ipredict could use realme logon. To gain a realme logon your identity is verified. [www.realme.govt.nz]



Edited 1 time(s). Last edit at 12/04/2015 07:43PM by WSP.

Top_shot, from your post above, it looks to me like you are fairly convinced that some people on iPredict have more than one account. What is the number one rule, so called? You can have only one account, that is the rule I obeyed anyway. But it now looks like iPredict staffers did no checking on new signups, instead hiding behind anonymous rules. A $20 per account fee to have more than one chance to play around, would be far too cheap for the political enthusiasts who have had a great time with the site over the years. I think that anyone who had multiple accounts should in fact be permanently banned from the site, then we'd see a real site running. Or, was that the whole point - was this a site to help market the National party and neoliberal policy from 2008 onwards, as Nicky Hager implied in his book, "Dirty Politics"?

And if this site is to keep running, be brave enough to publish a weekly closeoff from an impartial but named outfit, at a stated time, so the rest of us can check that the results haven't been fiddled with.

Sad (and baffling) news. I'd just like to say what a great job the team have done over the last seven years. Thanks a lot! I found iPredict to be a very useful tool, especially around election time, even if I had no exposure to the relevant stocks. I enjoyed being part of the community, particularly back in 2008-09 when it was all new and exciting.

I suggest transferring all contracts to bitcoin. Rebrand as torPredict, run by Dread Predict Roberts.

Thanks to the team at iPredict. It's been fun.

...and he'll most likely kill you in the morning.



Edited 1 time(s). Last edit at 12/05/2015 02:22PM by DrPierreHazedoneas.

Sorry to seem a bit mercenary, but can we get an update on how long we have to clear out of stocks? Respecting admin's statement that we can trade out, some it would seem sensible to wait until they close (all the January 1 closures) but for those who have money in stocks which are open for many months or even years (and who want to cash out rather than transfer), it would be useful to know how long we have.

I have loved the site. It has contributed to transparency in a way this little country desperately needs. It is a tragedy.

I quite agree with a bit of guidance being provided, Doctor. I have noticed that 2 of the 100 highest net worth traders have cashed up in just the last two days, so as the cash flows out of the site, the trades themselves will look less and less sensible.

As for transparency, yes, sometimes bigger bets came in to swamp out someone's right-wing agenda. But when the reports were being done by Exceltium (Matthew Hooton) and political trades were obviously being tweaked just beforehand, that was far from transparent. These were also the sort of people who probably held more than one trading account, and Vic Link allowed that to continue, and they allowed a fox like Hooton to rule the henhouse. They're only backing away from the site because it's not meeting the preferred political end as well, anymore. Simon Bridges has helpfully provided an excuse to close it down.



Edited 1 time(s). Last edit at 12/06/2015 04:12PM by jacksparrow.

Hi,

At this stage we are still closing contracts on their regular judgement dates. We are still looking into transferring your stocks to PredictIt, subject to the legalities and we will keep you posted on that front.

Admin

Dear Admin

So how about the suggestions of continuing the site, with the self-funding / restrictions on membership which would satisfy the govt's money-laundering concerns? I am sure most members would consider contributing a little bit more in fees so that the site could continue.

Please let us know if this is possible.

Thanks guys!

As much as we appreciate the idea of everyone chipping in the scale of the legal and technical costs of complying are much higher than the figures mentioned above.
However, PredictIt has a better platform for this and we are focusing our efforts to move the NZ contracts to that.

Thanks heaps for wanting to stick with us on this, we are working hard to find a solution.

Thanks for the update Admin, but just what is the scale of the costs involved, if the major new requirement appears to be that each account holder has to be positively identified? Isn't that what RealMe does? Don't you have to do the same process before opening a share trading account? Is a more honest response something along the lines of -

"There are multiple accounts held by some members on iPredict, and it would be embarrassing for management if these were wound back to be compliant with the very clear rules, being one account per individual or controlling persona".

While we're at it, how about some guidance on the expected date that a regular political summary of the site's findings will again be posted out to the media channels, and how impartial will that reporting be? i.e. whose impartial operation will be generating the report? Exceltium is not an acceptable answer.