Comments on: Free Speech in Event Market Claims http://www.midasoracle.org/2008/07/08/free-speech-in-event-market-claims/ Prediction Markets, etc. Thu, 02 Feb 2012 23:13:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Tom W. Bell http://www.midasoracle.org/2008/07/08/free-speech-in-event-market-claims/#comment-20242 Tom W. Bell Wed, 09 Jul 2008 04:27:18 +0000 http://www.midasoracle.org/?p=7467#comment-20242 I'm not sure about the commercial speech issue, either, granted; these things don't typically admit to certainty. Sounds like a job for . . . a prediction market! I think you and I would assign rather different prices to the relevant claim. Good point about the manipulation angle. Of course, a similar critique would apply to a great many other sorts of claims that carry no taint of wrongdoing, such as ones relating to elections, scientific discoveries, etc. Hilary could have shorted her nomination claims, committed deliberate gaffes, and cashed in, for instance. That DCMs are not government owed offers no defense to a First Amendment defense. Privately owned newspapers, television stations, book publishers, blogs, etc.,--they all can sue when state action interferes with their freedoms of expression. So, too, DCMs. That said, DCMs will almost certainly *not* even *ask* to host assassination or terrorism claims. They have to keep the CFTC happy, as it controls their fates in many ways. That's not a legal analysis; it's just a practical, public choice one. I’m not sure about the commercial speech issue, either, granted; these things don’t typically admit to certainty. Sounds like a job for . . . a prediction market! I think you and I would assign rather different prices to the relevant claim.

Good point about the manipulation angle. Of course, a similar critique would apply to a great many other sorts of claims that carry no taint of wrongdoing, such as ones relating to elections, scientific discoveries, etc. Hilary could have shorted her nomination claims, committed deliberate gaffes, and cashed in, for instance.

That DCMs are not government owed offers no defense to a First Amendment defense. Privately owned newspapers, television stations, book publishers, blogs, etc.,–they all can sue when state action interferes with their freedoms of expression. So, too, DCMs.

That said, DCMs will almost certainly *not* even *ask* to host assassination or terrorism claims. They have to keep the CFTC happy, as it controls their fates in many ways. That’s not a legal analysis; it’s just a practical, public choice one.

]]> By: Jason Ruspini http://www.midasoracle.org/2008/07/08/free-speech-in-event-market-claims/#comment-20238 Jason Ruspini Wed, 09 Jul 2008 01:50:59 +0000 http://www.midasoracle.org/?p=7467#comment-20238 Well even though they involve the CFTC, I don't think those cases are very relevant to this specific question, nor am I sure that the commercial speech exception would not apply to speech-as-buying-and-selling. . On the first point, I would argue that such options are within the CFTC's jurisdiction, but cannot be approved for listing on a DCM under the CEA because of outcome manipulation issues. (This aspect of the argument is missing from the CME/Hedgestreet treatment.) Also, the DCMs are private property, so isn't being able to speak (if not trade options on an exchange) somewhere else relevant here? . In any case, the CFTC can still issue a public interest exemption, which is part of what we both argue for in some situations. Maybe a completely new regulatory body might be appropriate for a certain class of markets, but the CFTC option is better than the status quo, especially since there is no contradiction between jurisdiction for some markets and exemptions for others. Well even though they involve the CFTC, I don’t think those cases are very relevant to this specific question, nor am I sure that the commercial speech exception would not apply to speech-as-buying-and-selling.
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On the first point, I would argue that such options are within the CFTC’s jurisdiction, but cannot be approved for listing on a DCM under the CEA because of outcome manipulation issues. (This aspect of the argument is missing from the CME/Hedgestreet treatment.) Also, the DCMs are private property, so isn’t being able to speak (if not trade options on an exchange) somewhere else relevant here?
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In any case, the CFTC can still issue a public interest exemption, which is part of what we both argue for in some situations. Maybe a completely new regulatory body might be appropriate for a certain class of markets, but the CFTC option is better than the status quo, especially since there is no contradiction between jurisdiction for some markets and exemptions for others.

]]> By: Tom W. Bell http://www.midasoracle.org/2008/07/08/free-speech-in-event-market-claims/#comment-20234 Tom W. Bell Tue, 08 Jul 2008 23:52:32 +0000 http://www.midasoracle.org/?p=7467#comment-20234 Jason: Far from "threatening" the CFTC, I'm trying to help it avoid yet another embarrassing run-in with the First Amendment. See Taucher v. Born, 53 F. Supp. 2d 464 (D.D.C. 1999); Commodity Trend Service, Inc. v. Commodity Futures Trading Commission, No. 97-C-2362, 1999 U.S. Dist. LEXIS 15877 (N.D. Ill. Sept. 28, 1999). Friends don't let friends violate the Constitution. Re your first point: Um, yeah, that's the point. The CFTC will be able to do no more than offer "no action" status. Re your second point: Sheesh, you have to stop hitting the cranky juice! Try drinking in some First Amendment cases, instead. The fact that you can speak in another forum by no means excuses a government restriction on speech. And the commercial speech exception only applies to speech intended to effectuate a sale, such as an advertisement. Asking a question in the form of a claim does far, far more than that. Jason:

Far from “threatening” the CFTC, I’m trying to help it avoid yet another embarrassing run-in with the First Amendment. See Taucher v. Born, 53 F. Supp. 2d 464 (D.D.C. 1999); Commodity Trend Service, Inc. v. Commodity Futures Trading Commission, No. 97-C-2362, 1999 U.S. Dist. LEXIS 15877 (N.D. Ill. Sept. 28, 1999). Friends don’t let friends violate the Constitution.

Re your first point: Um, yeah, that’s the point. The CFTC will be able to do no more than offer “no action” status.

Re your second point: Sheesh, you have to stop hitting the cranky juice! Try drinking in some First Amendment cases, instead. The fact that you can speak in another forum by no means excuses a government restriction on speech. And the commercial speech exception only applies to speech intended to effectuate a sale, such as an advertisement. Asking a question in the form of a claim does far, far more than that.

]]> By: Jason Ruspini http://www.midasoracle.org/2008/07/08/free-speech-in-event-market-claims/#comment-20230 Jason Ruspini Tue, 08 Jul 2008 22:32:23 +0000 http://www.midasoracle.org/?p=7467#comment-20230 Leaving aside the issue of threatening the CFTC, which might undermine all your other arguments, there are two big problems with this: . First, if the CFTC decides to regulate event markets as excluded commodities, such markets will not satisfy the "beyond the control" criterion. . Second, the freedom of speech argument is, I'm sorry, simply ridiculous. How does the CFTC not approving a contract curtail your freedom of speech exactly? You are still free to discuss what information you may have, in more detail, in many places - not to mention giving the FBI a call if you really know something. Also, since traders are motivated by profit, this would be (possibly misleading) commercial speech, granting that anonymously causing price changes counts as speech in the first place. This freedom of speech argument just strikes me as the kind of idea that seems clever at first but really isn't effective when you reflect on it and sober up a little. Leaving aside the issue of threatening the CFTC, which might undermine all your other arguments, there are two big problems with this:
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First, if the CFTC decides to regulate event markets as excluded commodities, such markets will not satisfy the “beyond the control” criterion.
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Second, the freedom of speech argument is, I’m sorry, simply ridiculous. How does the CFTC not approving a contract curtail your freedom of speech exactly? You are still free to discuss what information you may have, in more detail, in many places – not to mention giving the FBI a call if you really know something. Also, since traders are motivated by profit, this would be (possibly misleading) commercial speech, granting that anonymously causing price changes counts as speech in the first place. This freedom of speech argument just strikes me as the kind of idea that seems clever at first but really isn’t effective when you reflect on it and sober up a little.

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