USD law prof Tom Smith waxes enthusiastic about information markets, a view I share. He also wonders about their legality under U.S. law, as well he should. That’s a question to which I've given a good deal of thought, and about which I've written a legal analysis. You can read the results in Gambling for the Good, Trading for the Future: The Legality of Markets in Science Claims, 5 Chapman L. Rev. 159 (2002) [PDF format]. The short take: information markets (a.k.a. "idea futures markets," "prediction markets," etc.) could pretty easily dodge U.S. anti-gambling laws, but would face a somewhat trickier task avoiding CFTC regulation.
Tom, like me, has apparently toyed with the launching such a market himself. I take it from his post that he's given up, though. Not so, me. I'm still working on getting the Simon Market in Science Claims up-and-running. I'll soon have some exciting news to relate about that. For now, I'll just observe that Tom's particular interest—claims about weather events—already exist in the form of weather futures, traded on the Chicago Mercantile Exchange.