Prediction Markets and the First Amendment

The continuing development of prediction markets is important be-cause of their success in foretelling the future in politics, economics, and science. In this article, we identify the expressive elements inherent in prediction markets and explore how legislation such as the Unlawful In-ternet Gambling Enforcement Act of 2006 might harm such predictive speech. This article is the first to explore First Amendment protections for prediction markets in such depth, and in so doing, we distinguish pre-diction markets from other regulated areas such as gambling, commodi-ties, and securities trading. The article’s examination of prediction mar-kets also illustrates the limitations of current commercial speech doctrine. We conclude by discussing how the executive, legislative, and judicial branches might resolve the First Amendment challenges of regulating prediction markets, and we propose a new legal test, modeled on existing free speech jurisprudence, which may assist courts in adjudicating any constitutional challenges.

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