Yahoo to launch World Cup prediction market

NEWS
May 27, 2010

Originally published on May 18, 2010 By Scott Morrison, Dow Jones Newswires Have a prediction about which team will win the upcoming World Cup soccer tournament? Yahoo Inc. wants to hear about it. The Internet giant is poised to launch what could be the world's largest prediction market, on online clearinghouse where Yahoo users can make bets on winners, losers and other outcomes in the tournament slated to begin in South Africa on June 11. The idea behind prediction markets is to tap the wisdom of the masses, taking into account the collective opinion of a group of individuals rather than a single expert in order to answer a question. A number of prediction markets, such as Intrade and the Iowa Electronics Market, have long been used to make calls on specific or one-time events, such as whether a political candidate wins office or not. But the nature of the tournament, in which 32 national teams will play a total of 64 matches, makes accurate forecasting far more complex. To meet this challenge, Yahoo has developed Predictalot, a "combinatorial prediction market" that instantly calculates the interconnectedness of bets or predictions. That means the market will automatically adjust the odds for every game in the tournament that is impacted by a single bet or prediction, says Dan Reeves, a Yahoo Labs research scientist who is part of the Predictalot team. For instance, a prediction that Argentina will win the cup will instantly and automatically increase the odds of Argentina winning its Group B and subsequent elimination matches. Yahoo users who log on to Predictalot, which is slated to go live in early June, will be given 1,000 points with which they can bet on a wide range of predictions. In addition to picking specific teams to win certain matches, players can make less-than-specific bets like "England will advance further than Slovenia" or "a team that has never won the World Cup before will win this year." Depending on the final prediction set that Yahoo uses, there could be more than a billion predictions for users to bet on. For the full story, click here.