InTrade is $700,000 in the red

InTrade Is $700K In The Red

InTrade may not be too big too fail.

InTrade, the online betting site based in Ireland, has admitted that it has a $700,000 cash shortfall and that liquidation is a possibility. The site abruptly shut down on March 10 for an internal investigation of its financial woes. InTrade has also apparently identified two parties that it intends to sue as a result of the probe into what happened.

InTrade offered a unique and often controversial form of online gambling. Intrade’s platform provided a non-sports prediction market that allows individuals to take positions (trade “contracts”) on whether future events will or will not occur — i.e., which political candidate would win a specific election, who would become the next pope, or what actor or actress would win an Oscar for a particular category, and so on. It stopped accepting bets from residents of this country last November when it was sued by US Commodity Futures Trading Commission.

All customer accounts are currently frozen.

In a statement posted on its website, InTrade said that “If the Company is not able to rectify this cash shortfall position very quickly, the Company will become insolvent and therefore is very likely to go into liquidation.”

According to InTrade, following the initial audit, it has contacted account holders with balances of above $1,000 to ask them to agree to a so-called forbearance arrangement. This arrangement would evidently allow the company to remain solvent and resume limited operations. InTrade plans to provide an update on April 16 as to whether “sufficient forbearance” has been achieved. Added InTrade: “Please note that while we will try our very best to ultimately return 100% of Members’ settled account balances, we can make no promise or assurance that we will be able to do so.”

The Bloomberg news agency reports that the forbearance agreement apparently means that “The company is now asking members to accept immediate repayment of half their frozen money and waive claims to the rest on the ‘solemn promise’ that InTrade will try to refund that later.”

The firm apparently plans to file a lawsuit against “two distinct parties” for $3.5 million in damages or more, but has not identified who those parties are or what they did to put the online betting site into a tailspin. If InTrade prevails in its legal claims, it hopes to offer full “restitution” (i.e., reimbursement) to its customers.

Have you ever made any online bets through InTrade?

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