Dynamic pari-mutuel market

• US 20050171878A1
• Filed: 02/03/2004
• Published: 08/04/2005
• Est. Priority Date: 02/03/2004
• Status: Active Grant

• Current Assignee: R2 Solutions LLC (Acacia Research Corporation)
• Original Assignee: Yahoo! Inc. (Apollo Global Management, Inc.)
• Inventors: Pennock, David M.
• Granted Patent: US 7,788,158 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The present invention provides a method of speculating on a future event or the value of an asset in a market. The speculating may take the form of trading, hedging or wagering. A plurality of speculations on the outcome of the future event is received. For each one of the speculations in the market, the status of the speculations at the time that the speculation was received in the market is recorded. After a time period for receiving speculations in the market has closed, the pari-mutuel payoff for each correct speculation is calculated using a computer. The pari-mutuel payoff depends at least in part on the status of speculations at the time that the speculation was received in the market.

Claims

1. A method of speculating on a future event in a market, the method comprising:

receiving a plurality of speculations on the outcome of said future event;

for each one of said plurality of speculations in the market, recording the status of speculations in the market at the time that said speculation is received; and

after a time period for receiving speculations in the market has closed, calculating a pari-mutuel payoff for each correct speculation using a computer, the pari-mutuel payoff depending at least in part on the status of speculations in the market at the time that said speculation was received in said market.

2. The method of claim 1, wherein a price function is utilized to determine said pari-mutuel payoff.

3. The method of claim 2, wherein said price function determines, at any given instant in time, and for each respective possible outcome of said future event, the price to be paid in order to receive a desired number of shares of the pari-mutuel payoff for that outcome should that outcome occur.

4. The method of claim 3, wherein the price function depends on the relative number of shares purchased for each respective possible outcome of said future event, and/or the relative amount of money speculated on each respective possible outcome of said future event.

5. The method of claim 4, wherein the money received from all incorrect speculations is redistributed to the correct speculation, and the pari-mutuel payoff for each correct speculation on the outcome of said future event comprises a refund of the amount of the correct speculation plus a proportion of the money received and redistributed from all incorrect speculations.

6. The method of claim 5, wherein the proportion in the pari-mutuel payoff for each correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

7. The method of claim 4, wherein all of the money speculated on the outcome of said future event is redistributed to the correct speculations, and the pari-mutuel payoff for a correct speculation on the outcome of said future event comprises a proportion of all money speculated on the outcome of said future event.

8. The method of claim 7, wherein the proportion in the pari-mutuel payoff for a correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

9. The method of claim 3, wherein the market includes an electronic aftermarket for trading said shares.

10. The method of claim 9, wherein said electronic aftermarket permits said shares to be traded before said future event occurs.

11. The method of claim 10, wherein the electronic aftermarket permits said shares to be traded using a limit price.

12. The method of claim 5, wherein the market includes a first electronic aftermarket for trading said shares and a second electronic aftermarket for trading said refunds.

13. The method of claim 12, wherein said first and second electronic aftermarkets permit said shares and said refunds to be traded before said future event occurs.

14. The method of claim 13, wherein the first and second electronic aftermarkets permit said shares and said refunds to be traded using a limit price.

15. The method of claim 11, wherein a combined electronic aftermarket permits a trader to trade both shares and refunds.

16. The method of claim 1, wherein the market receives a payment before money is redistributed to correct speculations.

17. The method of claim 1, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations.

18. The method of claim 1, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations made before the correct speculation.

19. The method of claim 1, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations made after the correct speculation.

20. The method of claim 1, wherein said speculating comprises wagering and said plurality of speculations comprises a plurality of wagers.

21. The method of claim 1, wherein said speculating comprises trading and said plurality of speculations comprises a plurality of trades.

22. The method of claim 1, wherein said speculating comprises hedging or insuring, or some combination thereof.

23. A networked computer system facilitating speculations on a future event, the system comprising:

one or more client computers connectable to a network;

one or more server computers, connectable to the network, for facilitating speculations using the client computers; and

a software program stored on one of said server computers which, when executed, causes said networked computer system to carry out a method of speculating on a future event, the method comprising;

receiving a plurality of speculations on the outcome of said future event;

for each one of said plurality of speculations, recording the status of speculating in the networked computer system at the time that said speculation is received in said networked computer system; and

after a time period for receiving speculations has closed, calculating a pari-mutuel payoff for each correct speculation using a computer, the pari-mutuel payoff depending at least in part on the status of speculating at the time that said speculation was received in said networked computer system.

24. The computer system of claim 23, wherein a price function is utilized to determine said pari-mutuel payoff.

25. The computer system of claim 24, wherein said price function determines, at any given instant in time, and for each respective possible outcome of said future event, the price to be paid in order to receive a desired number of shares of the pari-mutuel payoff for that outcome should that outcome occur.

26. The computer system of claim 25, wherein the price function depends on the relative number of shares purchased for each respective possible outcome of said future event, and/or the relative amount of money speculated on each respective possible outcome of said future event.

27. The computer system of claim 26, wherein the money received from all incorrect speculations is redistributed to the correct speculations, and the pari-mutuel payoff for each correct speculation on the outcome of said future event comprises a refund of the amount of the correct speculation plus a proportion of the money received and redistributed from all incorrect speculations.

28. The computer system of claim 27, wherein the proportion in the pari-mutuel payoff for each correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

29. The computer system of claim 26, wherein all of the money speculated on the outcome of said future event is redistributed to the correct speculations, and the pari-mutuel payoff for a correct speculation on the outcome of said future event comprises a proportion of all money speculated on the outcome of said future event.

30. The computer system of claim 29, wherein the proportion in the pari-mutuel payoff for a correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

31. The computer system of claim 25, wherein the computer system includes an aftermarket for trading said shares.

32. The computer system of claim 31, wherein said aftermarket permits said shares to be traded before said future event occurs.

33. The computer system of claim 32, wherein the aftermarket permits said shares to be traded using a limit price.

34. The computer system of claim 27, wherein the computer system includes a first aftermarket for trading said shares and a second aftermarket for trading said refunds.

35. The computer system of claim 34, wherein said first and second aftermarkets permit said shares and said refunds to be traded before said future event occurs.

36. The computer system of claim 33, wherein said first and second aftermarkets permit said shares and said refunds to traded using a limit price.

37. The computer system of claim 33, wherein a combined aftermarket in the computer system permits a trader to trade both shares and refunds.

38. The computer system of claim 23, wherein the operator of the computer system receives a payment before money is redistributed to correct speculations.

39. The computer system of claim 23, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations.

40. The computer system of claim 23, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations made before the correct speculation.

41. The computer system of claim 23, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations made after the correct speculation.

42. The computer network of claim 23, wherein said speculating comprises wagering and said plurality of speculations comprises a plurality of wagers.

43. The computer network of claim 23, wherein said speculating comprises trading and said plurality of speculations comprises a plurality of trades.

44. The computer network of claim 23, wherein said speculating comprises hedging or insuring, or some combination thereof.

53. The computer usable medium of claim 39, wherein the computer includes an aftermarket for trading said shares.

54. The computer usable medium of claim 53, wherein said aftermarket permits said shares to be traded before said future event occurs.

55. The computer usable medium of claim 54, wherein said aftermarket permits said shares to be traded using a limit price.

45. A computer usable medium storing a computer program which, when executed on a computer, causes the computer to execute a method of speculating on a future event, the method comprising:

receiving a plurality of speculations on the outcome of said future event in a market;

for each one of said plurality of speculations, recording the status of speculating at the time that said speculation is received in said market; and

after a time period for receiving speculations in the market has closed, calculating a pari-mutuel payoff for each correct speculation using a computer, the pari-mutuel payoff depending at least in part on the status of speculations at the time that said speculation was received in said computer.

46. The computer usable medium of claim 45, wherein a price function is utilized to determine said pari-mutuel payoff.

47. The computer usable medium of claim 46, wherein said price function determines, at any given instant in time, and for each respective possible outcome of said future event, the price to be paid in order to receive a desired number of shares of the pari-mutuel payoff for that outcome should that outcome occur.

48. The computer usable medium of claim 47, wherein the price function depends on the relative number of shares purchased for each respective possible outcome of said future event, and/or the relative amount of money speculated on each respective possible outcome of said future event.

49. The computer usable medium of claim 48, wherein the money received from all incorrect speculations is redistributed to the correct speculations, and the pari-mutuel payoff for each correct speculation on the outcome of said future event comprises a refund of the amount of the correct speculation plus a proportion of the money received and redistributed from all incorrect speculations.

50. The computer usable medium of claim 49, wherein the proportion in the pari-mutuel payoff for each correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

51. The computer usable medium of claim 48, wherein all of the money speculated on the outcome of said future event is redistributed to the correct speculations, and the pari-mutuel payoff for a correct speculation on the outcome of said future event comprises a proportion of all money speculated on the outcome of said future event.

52. The computer usable medium of claim 51, wherein the proportion in the pari-mutuel payoff for a correct speculation is equal to the proportion of the number of shares corresponding to the correct speculation to the total number of shares corresponding to all correct speculations.

56. The computer usable medium of claim 49, wherein the market includes a first aftermarket for trading said shares and second aftermarket for trading said refunds.

57. The computer usable medium of claim 56, wherein said first and second aftermarkets permit said shares and said refunds to be traded before said future event occurs.

58. The computer usable medium of claim 57, wherein the first and second aftermarkets permit said shares and said refunds to be traded using a limit price.

59. The computer usable medium of claim 58, wherein a combined aftermarket permits a trader to trade shares using a limit price before said future event occurs.

60. The computer usable medium of claim 45, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations.

61. The computer usable medium of claim 45, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations before the correct speculation.

62. The computer usable medium of claim 45, wherein the proportion in the pari-mutuel payoff for each correct speculation is an inverse function of the distance in time between the correct speculation and incorrect speculations made after the correct speculation.

63. The computer usable medium of claim 45, wherein said speculating comprises wagering and said plurality of speculations comprises a plurality of wagers.

64. The computer usable medium of claim 45, wherein said speculating comprises trading and said plurality of speculations comprises a plurality of trades.

65. The computer usable medium of claim 45, wherein said speculating comprises hedging or insuring, or some combination thereof.