Are US-based real-money prediction exchanges to become federally regulated (as DCMs)? Or semi-regulated (as ECMs, or as exchanges covered by no-action letters)?

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In its request for comment, the CFTC reminded the public that the commission should &#8220-promote innovation for futures and derivatives.&#8221- It also added that —hint, hint— the Iowa markets have been valuable sources of public information and have predicted Presidential outcomes better than polls. The 2000 act gave the CFTC the authority &#8220-to promote responsible economic or financial innovation&#8221- by creating an exemption for certain types of contracts (such as one in a prediction market). […]

&#8220-Basically I think they&#8217-re going to expand the IEM no-action letter and take legal measures to make sure that legal contracts aren&#8217-t subject to antigambling laws,&#8221- says Chapman law professor Bell. […]

BusinessWeek gets it right about where the CFTC is going. (Go reading the 2 pages.)

However, I still believe that HedgeStreet has a strong argument (about the political elections being &#8220-excluded commodities&#8221-) and I wonder what the CFTC will do about it.

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