(MENAFN - AFP) US regulators on Monday charged predictions market Intrade with violating options laws for selling contracts on news topics like political races and Academy Awards winners to US customers online.
The Commodity Futures Trading Commission filed a civil complaint against Dublin, Ireland-based Intrade The Prediction Market Ltd. and Trade Exchange Network Ltd. for offering to and accepting orders from US customers on what it said were commodity options contracts.
In 2005, Intrade and TEN settled a CFTC complaint by agreeing to not accept orders from US visitors to their website and to warn US visitors that they could not legally trade the contracts.
However, the CFTC said, between September 2007 and June 2012, Intrade and TEN continued to offer and sell the contracts to US traders.
Intrade has gained popularity with people who want to gamble on the results of events that have ranged from the US presidential race and the Academy Awards to a US attack on Iran or Greece's exit from the eurozone.
Rather than offering straightforward odds, like online betting websites and bookmakers that are banned in the United States, the Intrade site offers yes-or-no contracts that then trade and prices that change based on the demand from buyers and sellers.
Current popular contracts include whether or not the US economy will go into recession next year; whether or not Bashar Assad will be in power as Syria's president on June 30, 2013, or whether "Silver Linings Playbook" will win the best picture Oscar.
Such deals are considered as binary options contracts by the CFTC, which says they then must be offered on an exchange to be legal for US users.
"The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity," said David Meister, the CFTC's enforcement division director.
The CFTC said it had been helped in its investigation by the Central Bank of Ireland and that it was seeking civil monetary penalties as well as the disgorgement of any illicit profits earned by Intrade.