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Augur Blockchain Bets Placed on Trump Assassination Leave Regulators Powerless to Act

Written by:
Guest
Published on:
Jul/31/2018

The so-called "Silk Road of Gambling", blockchain gambling platform Augur launched earlier this month. The “prediction market protocol” built on the ethereum blockchain permits gamblers from around the globe to create markets on just about anything, including the assassination of U.S. President Donald Trump. Regulators, meanwhile, may have little way of preventing this type of wagering.

Not Again!

In 2008, Ireland bookmaking powerhouse Paddy Power released odds on the assassination of then newly elected US President Barack Obama.

Rightfully so, Paddy was widely condemned for the offering. 

The bookmaker initially rejected calls to withdraw the controversial bet option, claiming it was a nonsense to suggest that their stance could actually encourage anyone to go out and try to kill Mr Obama.

In Dublin, Shelia Paskman, a spokesman for the American Embassy in Ireland, said last night : "This is completely inappropriate."

Public pressure and regulatory warnings forced Paddy's hand, however. 

Over the past decade we have seen little in the way of these types of odds offered.

But Augur is no ordinary bookmaker.

Decentralized Market

From Forbes.com:

By using so-called “smart contracts” Augur has been built as a decentralized protocol that runs entirely on the blockchain and could, in theory, scale infinitely.

It’s creators, the not-for-profit Forecast Foundation, also therefore have no control over what markets are made and what bets are being placed.

“Centralized prediction markets have many risks and limitations,” Joey Krug, cofounder of the Forecast Foundation told Forbes. “They do not allow global participation, they limit what types of markets can be created or traded, and they require traders to trust the market operator to not steal funds and to resolve markets correctly.”

“Augur aims to resolve markets in a fully decentralized way.”

Augur raised $5.5 million in 2015 during one of the initial ICOs.

According to its website the Foundation now: “Has no power to censor, restrict, or curate markets, orders, trades, positions or resolutions on the Augur protocol contracts.”

Regarding the growth of assassination markets and other nefarious uses of his protocol, Joey Krug, cofounder of the Forecast Foundation, told Forbes.: “The Augur protocol is nothing more than open source software, and individual users of the Augur protocol are the ones that create prediction markets using the Augur protocol.”

To date, the Trump assassination markets have only received around $23,500 worth of bets.  Other assassination markets have been created and were seeing little to no action, including Trump adversary Jeff Bezos, owner of Amazon and the Washington Post.  In fact, of the nearly 800 markets created on Augur, half have received zero bets.  It is clearly a work in progress. 

Augur’s REP token has now fallen to become the 70th-most-traded crypto token, with a capitalization today of $335 million, down from over $1.1 billion in January.

“It’s just quite difficult at this stage to know how do you know how reliable the technology will be going forward, whether there will be issues with it, or whether it will actually pan out,” says Adi Ben-Ari, founder and CEO of blockchain consultancy Applied Blockchain.

What Can Be Done

The murky nature of the technology used by Augur could lead to regulatory difficulties.

From Forbes:

The U.K. Gambling Commission (UKGC) has been progressive when it comes to green-lighting digital currencies as a payment method for its licensees.

But when asked about Augur, a UKGC spokesperson directed Forbes to its advice note on remote betting and betting intermediaries written in 2013, which states:

“If the operator is not a party to the bet ... but is providing a service to allow two other parties to make and accept a bet, then the operator is acting as a betting intermediary and the appropriate licence is a betting intermediary operating licence.”

Krug says it is the gamblers that must be held responsible for what types of trades they wish to engage in on Augur, saying the Foundation: “encourages Augur users to follow their respective local jurisdictional laws, rules and regulations, even though it can’t and doesn’t control their use of the Augur protocol.”

It should be noted that a so-called "kill switch" (no pun intended) used to delete these types of bets was removed by the company only one week ago.

- Jagajeet Chiba, Gambling911.com

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