I worked up a draft bill for the event. We didn't end up discussing it very much, instead focusing on more convivial and interesting issues. Thinking that others might want to comment on my proposed act, I offer it here. My comments appear in brackets.
Section 101. Short Title
This Act may be cited as "The Prediction Exchange Legalization Act of 2006."
[I chose that somewhat idiosyncratic usage both to distinguish the type of idea future market at issue from other types and because I think it offers rhetorical benefits. No "markets," please!]
Section 102. Prediction Exchange Policy
It is the policy of the United States Government to:
(a) encourage the development of market-based mechanisms for resolving questions of science, technology, and public policy;
(b) clarify the legality of qualifying prediction exchanges; and
(c) protect such exchanges from state and federal regulation to the fullest possible extent.
[I could say more under this heading, granted. Robin Hanson thinks, for instance, that some sort of "public benefit" clause would prove useful. I've yet to figure out a useful and graceful way to squeeze that in, though.]
Section 103. Definitions
(a) A "prediction exchange" is a forum that uses instrumentalities of interstate commerce to facilitate the buying and selling of "prediction certificates"
(b) A "prediction certificate" is a document promising to pay, upon the demand of its owner, a specified amount of money on condition that the "prediction claim" referenced by the certificate be judged true by a particular "prediction judge."
(c) A "prediction claim" is an answer to an unresolved question of science, technology, or public policy that can be resolved primarily by the application of skill. A "prediction claim" is not an answer to an unresolved question about the outcome of a sporting event or the future price of a commodity transaction currently regulated by the Commodity Futures Trading Commission.
(d) A "prediction judge" is a person, persons, organization, or entity referenced by a "prediction certificate" and authorized to designate as true a prediction claim, subject to any limits or requirements specified on that prediction certificate.
[Boring though these definitions may appear, they do a lot of heavy legal lifting. Here, as with the title of the bill, I adopt somewhat idiosyncratic usages. I don't want anyone to confuse these items with those discussed in the more general literature on idea futures.]
Section 104. Preemption
(a) No Federal agency, State, political subdivision of a State, or political authority of 2 or more States may enact or enforce any law, regulation, or other provision that has the force or effect of law and that relates to any prediction exchange except as otherwise provided in this chapter.
(b) No provision of this chapter shall in any way abridge or alter remedies now existing at common law.
[That is the strongest of three preemption clauses I've drafted, and the version I naturally favor. Here is the moderate preemption clause:
(a) (First paragraph same as above)
(b) No provision of this chapter shall in any way abridge or alter remedies now existing under the common law of contract, tort, or property.
Here is the weak preemption clause:
No Federal agency, State, political subdivision of a State, or political authority of 2 or more States may enforce against any prediction exchange a law, regulation, or other provision that has the force or effect of law and that pertains to gambling, commodities futures, securities, bucket shops, insurance contracts, or contests of skill or chance.]