Free to Trade?

A U.S. lawyer, formerly of El Paso and now practicing in Ireland, has been taking on U.S. gambling restrictions before the World Trade Organization -- and winning. The New York Times tells the story about Mark Mendel and his representation of Antigua and Barbuda, a tiny Caribbean nation challenging the U.S. ban against Americans betting over the Internet.

The WTO's three rulings against the United States may directly affect those U.S. citizens who like to play poker or make sports bets online. But anti-gambling laws also can cause trouble for so-called prediction markets. Prediction markets, which aggregate information from participating individuals into a collective judgment about a future event, often use tradable securities with monetary payouts to encourage participation. Depending upon the final outcome of this trade dispute, the WTO rulings might help or hurt this promising but fledging field.

Full disclosure: Professor Miriam Cherry of McGeorge School of Law and I have published two law-review articles about prediction markets. We have a forthcoming article that will discuss potential First Amendment protection for predictive expression in these markets.

Comments

[Miriam Cherry]

Thanks for mention, Rob (and for the very appropriate disclsoure). For anyone who is interested, our articles can be found on SSRN, and the forthcoming article will appear in the Illinois Law Review in 2008.