Play Money? Not to These News Investors
By SARA ROBINSON
JUST as a day trader combs business publications for tidbits that
could affect a share price, Jérôme Charretier, a 24-year-old French
business student, anxiously listens to the news stations in his car,
hoping to make it home in time to adjust his portfolio.
Mr. Charretier's holdings don't have any real-world value. Rather,
they are virtual futures contracts on the outcomes of events — like
whether Prime Minister Lionel Jospin will run for president in 2002.
Or whether the Palestinian leader, Yasir Arafat, and the Israeli
prime minister, Ariel Sharon, will shake hands by Sept. 22.
"It's stressful sometimes," said Mr. Charretier, who trades
these futures sometimes for hours in one day. "If I hear something
very important that will modify the price of a share I own, I can't
play in my car so I'm very impatient to go home."
Charretier is a participant in NewsFutures, a Web site that poses
questions about future events — whether sporting, financial or
political — and enables the ongoing trading of "shares" on the
outcomes. The site also provides chat rooms and forums, much like
Yahoo Finance message boards,
where players can discuss each day's events and their impact on
share prices. For now, the site (www.newsfutures.com) exists only in
French, but the company plans to introduce an English version this
French law doesn't permit online gambling, so the
market in events is merely a game with virtual winnings and losses.
Each new user gets a starting balance of 2,000 doubloons, the game's
fictive money, supplemented by 500 more each day, up to a cap of
Each contract in favor of an outcome of an event is
worth 100 doubloons when that outcome occurs and zero otherwise.
Since the contracts can be traded and the perceived likelihood of
the event is changing over time, the actual price of a contract
rises and falls, just as financial securities and derivatives do.
Winnings propel participants in the site's player rankings and can
later be used to purchase gifts at the site's online
Among the most popular bets are those connected to
live events, like a basketball game or an episode of reality
television. "It's fun to watch the real-time movement in the price,"
said Émile Servan-Schreiber, president of NewsFutures. "This is what
interactive TV should be."
Mr. Charretier agrees. "It is this
interactivity, like a real stock market, that obsesses you and
forces you to play again and again," he said. "You think that if you
leave your screen, something could happen."
incorporated in the United States, was founded by Mr.
Servan-Schreiber and Maurice Balick, an American. Mr. Servan-
Schreiber's grandfather, also named Émile, founded Les Échos, the
first business news service in France. His father, Jean-Jacques, is
a prominent politician and journalist who was a founder of the
Mr. Servan-Schreiber said he hoped that the
site would continue his family's tradition of generating interest in
the news by providing a new way to interact with events as they
unfold. "What we are doing is inventing a new type of newspaper,
focused not on today's news but on tomorrow's news," he
NewsFutures is not the only site to enable people to
gamble, in a sense, on future events. Iowa Electronic Markets
(www.biz.uiowa.edu/iem), a real-money futures market run by the
University of Iowa business school as a teaching tool, focuses on
economic and political events. The Hollywood Stock Exchange
(www.hsx.com) allows users to bet virtual cash on fictive movie and
The concept is a powerful one. Studies show
that markets have better predictive power than polls. When stakes
are high, those with the most information will have an incentive to
make large bets on an outcome while those with less information will
tend to drop out, or so the theory goes. Even play-money markets
have predictive power, according to a study released this year by
scholars at the NEC Research Institute, Pennsylvania State
University and the Technical University of Denmark.
without the lure of real money, the NewsFutures site, started up
last fall and marketed by word of mouth, has attracted 15,000
registered users, some 5,000 of whom play regularly, sometimes for
hours at a time.
In France such enthusiasm can be expensive
since dial-up users must pay by the minute for their Internet
access, though the site itself is free. The company's revenue comes
from partnerships with French publications that integrate their
coverage with the relevant portion of the NewsFutures site and
provide subscriptions and other gifts for the online
The site received its initial boost during the
presidential race between Al Gore and George W. Bush, when thousands
flocked to the site to place bets on the outcome. Except for a brief
swing toward Vice President Gore during the legal battle over the
vote recount in Florida, the price remained fairly steady at 80
doubloons in favor of Mr. Bush, Mr. Servan-Schreiber
Sports events are highly popular, as are daily
bets on whether France's CAC 40 financial index or the Nasdaq will
end the day up or down.
Denis Lazat, who runs SwissQuote
France, a financial Web site, says he uses NewsFutures to bet on
politics or to test his theories about the markets without the risk.
"If I'm wrong, it doesn't matter; I'm just glad it wasn't real
money," he said, just "pure