Tom Bell posted a short draft (with variations) of a bill legalizing Prediction
Markets. The
bill’s focus is explicitly on markets for science, technology, and
public policy, so it would benefit the
Simon Exchange and possibly
the Washington Stock
Exchange, but not other, general purpose, markets. The strongest
version’s provisions are really simple: no federal, state, or local
government may enact or enforce laws to regulate prediction exchanges,
and standard commercial law continues to hold regarding the contracts.
(The limitation to claims on science, technology, and public policy
is in the definitions.) The weakest version only forbids enforcement
against prediction markets of laws concerning gambling, commodities
futures, securities, or insurance. I’ve simplified the legalese in
order to get it to a couple of lines. Tom’s version is only a little
longer in order to have all the necessary legalese.
These would be very nice rules if they were law, but the more
interesting question is what it would take to get them enacted.
Congress isn’t in the business of enacting legislation merely because
it would make us all freer; there has to be a substantial lobby, or
evidence of plenty of interest to make it happen. In order to get the
support of the relevant industry (Trade
Exchange Network, ProTrade),
the terms would have to be opened up to include more than just science
and technology. So a big question is whether enough support could be
lined up with a version limited to science and technology to get a
bill passed (it should be easier because the subjects are respectable,
and can be pitched as “not like gambling”), or whether having
additional companies backing it would help more. I wouldn’t mind
letting the sports markets join the party, as long as it makes it easier for a bill to pass. If no bill is going to
pass, it doesn’t make a difference anyway, and we’re left looking for
legal strategies that will allow public policy markets to avoid a suit
or survive one if it happens.