Iowa Electronic Markets
The academic pioneer of real-money political and economic prediction markets.
The Iowa Electronic Markets (IEM) was created in 1988 by faculty members Robert Forsythe, Forrest Nelson, George Neumann, and Joel Horowitz at the University of Iowa Tippie College of Business. Established as a non-profit educational and research experiment during the 1988 US presidential election, the IEM holds the distinction of being the world's oldest continuously operating online real-money prediction exchange.
To operate legally in the United States without registering as a formal derivatives exchange, the IEM secured milestone No-Action Letters from the Commodity Futures Trading Commission (CFTC) in 1992 and 1993. Under these regulatory guidelines, the IEM operates strictly for academic research and teaching, enforcing a strict $500 maximum investment cap per participant and charging zero trading fees. The market utilizes continuous electronic limit orderbooks where participants trade binary winner-take-all contracts or vote-share contracts tied to political elections and macroeconomic indicators.
Over nearly four decades of operation, empirical data from the IEM established foundational academic evidence that financial markets regularly outperform traditional opinion polling in forecasting election outcomes. By demonstrating the power of aggregated crowdsourced financial incentives, the IEM served as the historical blueprint for modern event trading venues, including PredictIt, Kalshi, and Polymarket.