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Our favorite prediction market -- Tradesports -- has gotten embroiled in an unfortunate controversy. Our PM guru Chris Masse reports on how the Dublin-based futures exchange has had to make a tough call on how to settle its contracts on whether or not North Korea would test a missile. It's pretty evident that North Korea did indeed test a missile on July 4, so you'd think the contracts ought to pay off for those who bet "yes." But there's a glitch. The terms of the contract called for confirmation of the launch by the Departmet of Defense -- and as it happens, DOD has not been willing to respond to Tradesports' request for confirmation. At the moment it looks like Tradesports is making the decision that, in the absence of confirmation, the contracts will be settled in favor of the "no" bettors. This is a tough call for Tradesports, but it strikes me that they are making the wrong decision. The contract is on whether there was a test launch, not on whether some particular source said there was. The specified source indeed did not confirm launch, but neither did it deny it. In the absence of a denial, Tradesports should invoke the contract cause that permits it to improvise a new source. To not do so strikes me as a fussy adherence to a relatively trivial element of the contract's promise. Since there are bettors on both sides, Tradesports is bound to disappoint a lot of people no matter how it finally decides. But it seems to me that their brand image will be hurt by disappointng a popultion of people who self-evidently won their bet, and now are not getting paid because of what amounts to a technicality.

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