Miriam Cherry and Robert Rogers explore the interaction of “Prediction Markets and the First Amendment.” If prediction markets are “expressive,” does that mean that U.S. government actions that constrain prediction market development potentially raise First Amendment issues on free speech grounds? The authors propose a way forward in which courts, at least until the legislative and administrative branches clarify policy, apply a Miller v. California-like test for identifying permissible prediction markets.
Miller v. California established a three-part test for regulating obscenity, and it is the third part of that test is key for Cherry and Rogers: “whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value.” On these grounds Cherry and Rogers suggest the first amendment may offer protection for prediction markets directed at political, economic, cultural, or scientific topics, but perhaps not for prediction markets for sporting or entertainment events.
I’m not sure First Amendment law is the best protection for prediction markets, but it might be better than nothing.
HT to Chris Masse at Midas Oracle.