Trading system and method using a virtual pari-mutuel pool

Abstract

A system and method for trading using a virtual pari-mutuel pool (VPP) to determine returns of investment for an investments in the outcome (or combination of outcomes) for a particular event. In an illustrative implementation, a electronic virtual pari-mutuel pool (VPP) is created using information from a “dirt-world” pari-mutuel pool (DWPP) at an event site and investment information from online investments (e.g., online investments generating an online pool (OP)) on the outcome of the event which are agnostic to the DWPP. The VPP sets the return of investment on an investment made that predicts the correct outcome (or combination) of outcomes for the event. Further, in the illustrative implementation, the trading system and methods operatively can utilize an auction system and a pari-mutuel pool or virtual pari-mutuel pool system and incorporating limit orders to provide payouts for multiple outcomes on an individual events.

1 . A trading system comprising: 
 a first data store having information representative of dirt-world pari-mutuel pools established to allow participating investors to invest in the outcome of a particular event;    a second data store having information representative of online investments in the outcome of particular event without using dirt-world pari-mutuel pool information; and    a trading engine cooperating with the first and second data stores to generate a virtual pari-mutuel pool (VPP) for use in calculating the return of investments for an investment made in the outcome in the particular event, 
 wherein the trading engine operates according to a selected trading/investment paradigm based on a pari-mutuel pool model.  
   
   
   
       2 . The trading system as recited in  claim 1  further comprising a payment processor for paying out returns on investments provided by participating users.  
   
   
       3 . The trading system as recited in  claim 1  wherein the trading system comprises a computing environment.  
   
   
       4 . The trading system as recited in  claim 3  wherein the trading engine comprises a computing application.  
   
   
       5 . The trading system as recited in  claim 4  further comprising a user interface allowing participating user to input data to the trading engine representative of investments, 
 wherein the investments are representative of a stake in the outcome of the event.    
   
   
       6 . The trading system as recited in  claim 5  further comprising a communications network operative to facilitate communications between the trading system and cooperating parties comprising one or more of participating user computing environments and other electronic trading systems.  
   
   
       7 . The trading system as recited in  claim 1  further comprising a user data store operative to store data for participating users.  
   
   
       8 . The trading system as recited in  claim 7  wherein the participating user data store comprises data representative of the investment history for a participating user.  
   
   
       9 . The trading system as recited in  claim 6  wherein the dirt-world data store receives data from cooperating dirt-world venues in real-time for selected events.  
   
   
       10 . The trading system as recited in  claim 9  wherein the online investment data store receives data from cooperating trading systems in real-time for selected events.  
   
   
       11 . A method for trading comprising: 
 receiving as input dirt-world pari-mutuel pool information about an event, the outcome of the event being the basis of the investments in the dirt-world pari-mutuel pool;    receiving as input online investment information about the event wherein the outcome of the event comprises basis of the investments that comprise an online pool, the online investment information being agnostic to the dirt-world pari-mutuel pool information; and    creating a virtual pari-mutuel pool (VPP) using the dirt-world pari-mutuel pool information and the online pool information.    
   
   
       12 . The method as recited in  claim 11  further comprising receiving and processing investments from and between participating investors comprising an online pool, 
 wherein information from the online pool comprises a portion of the VPP.    
   
   
       13 . The method as recited in  claim 12  further comprising calculating a return of investment for an investment that correctly predicts the outcome of the event using the VPP.  
   
   
       14 . The method as recited in  claim 13  further comprising selling insurance contracts for the outcome of the event.  
   
   
       15 . The method as recited in  claim 14  further comprising calculating the value of the insurance contracts after the event occurs.  
   
   
       16 . A method for trading comprising: 
 (a) creating an initial pari-mutuel pool (IPP) using market orders;    (b) calculating initial contract payouts by dividing the IPP by the number of investments for each outcomes of a multiple outcome event;    (c) for each outcome, select limit orders which better the ICP for a selected outcome;    (d) for each outcome, determine the best limit order (BLO);    (e) determine the mount of additional investments on a selected outcome for the IPP that could yield the price of the BLO;    (f) adding the amount of additional limit orders to the IPP if the number of additional limit orders is less than the amount of existing limit orders;    (g) calculating a new pari-mutuel pool (NPP) using modified IPP; and    (h) calculating new contract payouts (NCP) for each outcome using NPP.    
   
   
       17 . The method as recited in  claim 16  further comprising adding the amount of additional limit order to the IPP and repeating steps (c) and (d) if the number of additional limit orders is greater than the amount of existing limit orders.  
   
   
       18 . The method as recited in  claim 16  further comprising treating the NPP as the IPP and the NCP as the ICP and repeating steps (a)-(h) using the ICP and IPP.  
   
   
       19 . The method as recited in  claim 16  further comprising communicating a market clearing price to a participating user.  
   
   
       20 . The method as recited inc  claim 19  further comprising providing a payment processor for paying out returns on investments provided by participating users according to the market clearing price.