UK hedge fund to launch gambling platform on climate

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British systematic hedge fund Winton Capital Management has unveiled plans to set up a prediction market for climate, that will enable individuals to gamble on global climate up to several decades in the future.

Winton specified that the platform will form a mechanism for elucidating and aggregating the views of climate experts, that could also be used as a tool for communicating information about climate change in a probabilistic way.

The Winton climate prediction market will be based in the UK and established as an online gambling site subject to the regulation of the Gambling Commission.

It will be composed of a central market maker that will inject money into the market, contrary to traditional bookmakers or betting exchanges.

“The philosophy of a subsidised prediction market is that the party seeking information should fund the market, rather than the participants who provide the information,” stated Winton.

Funds gambled on the platform will be deposited in an independent trust account. Participants will be credited with units to trade in the market while units’ cash value will appreciate over time as the funds in the trust account earn interest.

Bets will initially be authorised on the atmospheric concentration of carbon dioxide and the global mean temperature anomaly.

Winton said that if this is successful, additional markets could be added which target other climate variables, such as regional temperatures or sea-level rise.

The UK hedge fund is currently testing internally a prototype online platform n has developed a prototype online platform and might open it wider next year.

“We are also engaged in discussions with organisations who could use the market for decision support, as well as potential co-sponsors,” Winton also said.