"Now You Can Actually Bet On Social Security"

It would seem that with the ongoing and heated debate going on between the Democrats and the Republicans with regard to the issue of Social Security reform that enough food-for- thought would be provided on this subject for the average person. But apparently, however, the debate itself is not enough since there are people out there who in fact are deliberating the topic enough for them to actually place wagers on how and when the issue will be resolved. In Dublin, Ireland, Intrade, the online futures market lists three futures contracts that give traders the opportunity to bet on whether or not a law will be passed that would permit United States workers to divert a part of their Social Security taxes directly into individual investment accounts.

The first contract allows traders to bet on whether they think a law allowing the individual investment accounts will be passed by December 31, 2005. The second contract allows traders to bet on whether or not the law will be passed by June 30, 2006, while a third contract includes those who desire to wager that the law will be passed by December 31, 2006. At this point, most of the wagers placed do not favor the individual accounts. Traders predict only a nine percent chance for the law passing by this December. That it will be passed by June 30 of next year has received a 21 percent chance and passage by December 31, 2006 has received a somewhat higher chance of 27 percent.

Those who in fact doubt the predictive power of this type of wagering, should check again. As an example, a day prior to the last presidential election, Intrade traders correctly predicted that George Bush would win the election. Not only that, but they actually also correctly predicted the outcome for fifty states and the District of Columbia. In addition, Additionally, Intrade traders correctly predicted the winner in 33 out of 34 Senate races. If that isn’t enough, traders also accurately called the winner for the papal elections a full two days before the official announcement.

Anyone who lives in the United States, however, should think again before making an online wager with regard to Social Security reform (or any other online wager for that matter). That is because Internet gambling is illegal in the United States, being banned under the articles of the 1960’s Wire Act. Former director of the New Jersey Division of Gaming Enforcement Frank Catanial, who is also a current consultant to the online gambling industry, says that the whole Internet gambling issue is a “gray area”. He also points out that there is not total agreement among all legal analysts with regard to the Wire Act, that it covers Internet gambling, since the law was introduced well before Internet gambling was ever contemplated. Another factor clouding the legal status of Internet gambling is the fact that some states have a plain and absolute ban on online gambling while other states do not.