Why BetBacked Is Legal in the United States

Author: Michael Rossides

Publication Date: 6/20/2020

This Paper Pertains to Real Money Betting on BetBacked

BetBacked is a betspeech platform that will operate with play money for a period of debugging. After that, the hope is to operate it with real money in the UK, where licensed peer-to-peer betting is legal, and in the US, where it will almost certainly be shut down by the government. After it's shut down, the operator's First Amendment counsel will use the facts and theories below to assert First Amendment protection for BetBacked and its managers.

Contents

Part I: Facts

Summary

BetBacked (BB) is a public medium where users identify statements on the Internet and make even-odds bets about whether those statements will be deemed fair or misleading, in the unanimous opinion of three pseudo-randomly selected judges who are experts on the subjects of the bets.

Each bet is a public opinion about whether a specified public statement will be found fair or misleading.

Public opinions are speech.

As a public opinion, each bet provides information from the bettor to the public about the veracity of a specific public statement. Therefore, each bet is speech about the veracity of specified speech.

Taken together, all the bets about a specific public statement comprise a betting market. They provide the market's collective opinion about whether that statement is misleading or fair.

The veracity of public statements is a matter of public interest.

Therefore, the bets on BB, individually and collectively, are speech about a matter of public interest. In other words, the bets on BB are public interest speech.

Public interest speech is protected by the First Amendment.

Therefore, the bets on BB, and BB itself, are protected by the First Amendment.

Definitions: Statement, Bet Contest, Bet Offer, Make a Bet, Bet, Wager, Lie, Mislead, and Lie/Mislead

In this paper, a statement, also called a subject statement, means all or part of the information ("content") displayed on a webpage. The idea of a statement is broader than that, but this definition suffices for the facts and legal principles discussed here.

On BB, users can create bet contests about "subject statements." Each contest is about one statement. And, each contest lets any user bet about whether the subject statement is fair or misleading. For example, a user could identify:

"Take charge of your cholesterol with #1 recommended Garlique."

as the subject statement, and create a contest that enables other users to bet on FAIR or MISLEADING.

A bet offer is an offer/commitment by a user to risk money on one side of the contest, FAIR or MISLEADING. A user might offer to bet, say $1,000, on MISLEADING.

The user wins money if the outcome of the contest is the side the user picked, and loses money if the outcome is the opposite side.

A bet offer is fully or partially matched when another user makes a bet offer on the other side of the contest. In the hypothetical contest above, if another user offers to bet $1,000 on FAIR, the bet offers are fully matched.

In this paper user makes a bet, usually means that the user makes a bet offer. It can also mean that the user makes a bet offer that is accepted.

Bet is a general term that this paper uses to refer to any state of a bet (see below). It can refer to a bet contest, a bet offer, matched up offers, a sealed contest, and a decided contest. Context determines the meaning of the term.

Wager is a synonym for bet and bet offer.

Mislead is conventionally a verb. Just as lie is both verb and noun, this paper will treat mislead as both verb and noun. As a noun, it will mean a misleading statement. So, tell a mislead will mean to make a misleading statement.

Lie in this paper will simply mean a misleading or false statement, but not necessarily an intentionally misleading one. Thus, lie and mislead, in this paper, are exact synonyms, and are often referred to as lie/mislead.

Purposes of BetBacked

The purposes of BB are:

  1. To evaluate and display the veracity of speech on the Internet.
  2. To be a lie/mislead detector that:
    • lets individuals publicly attack/expose/describe a statement by betting that scientist-judges will find it misleading.
    • lets multiple bettors collectively attack/expose/describe a statement by betting on MISLEADING.
  3. To be a fair statement detector that:
    • lets individuals publicly back/expose/describe a statement by betting that expert-judges will find it fair.
    • lets multiple bettors collectively back/expose/describe a statement by betting on FAIR.

Bets on BetBacked Are Speech

On BB, each bet contest is created by a user about a subject statement. Once a contest is created, bet offers can be made about the statement. All bet offers are even-odds.

A subject statement can be:

  1. all the content on a single web page at a URL.
  2. an excerpt of the content found at a URL.

The states of a bet and bet contest are as follows:

  • Offers Made – a bet offer or offers has/have been made, but not enough money has been wagered in total on each side of the contest to trigger the selection of judges.
  • Sealed – enough money has been wagered in total on each side, wagering is stopped, and the selection of judges has been triggered.
  • Judging In-Process – money pledged in bet offers has been collected, and the judges have been selected, but they have not yet entered their decisions.
  • Outcome Determined – the judges have entered decisions and the outcome can be:
    • FAIR – the judges have unanimously decided that the statement is fair.
    • MISLEADING – the judges have unanimously decided that the statement is misleading.
    • TOO COSTLY – the judges have unanimously decided that the cost of the research necessary to reach a decision exceeds the judging fee.
    • UNDECIDABLE – the judges have unanimously decided that the statement can't be found fair or misleading.
    • SPLIT DECISION – at least two judges have arrived at different decisions.

In all these states, an essential, informative part of any bet contest is the money wagered on FAIR and MISLEADING (the individual wagers and the total wagers), which BB displays.

By wagering, individuals tell the public what they, personally, think about the truthfulness of the subject statement. Individual bettors collectively make up a market, and their total bet offers provide the public with the market's belief about the truthfulness of the subject statement.

The bet offers describe speech. As such, they are public meta-statements about subject statements, which means the bet offers themselves are a form of speech.

The bet offers are betspeech and the bettors are bet speakers.

Accordingly, BB is a form of press, a bet press that enables bet speakers to create and disseminate their betspeech.

On BB, a betting market about a statement further creates a new hybrid form of speech: bet-described speech, which is the combination of a conventional statement and its bet market description. A conventional statement associated with a betting market that describes it is fundamentally different from the conventional statement alone.

For example, "Take charge of your cholesterol with #1 recommended Garlique" by itself is one thing. If it's associated with a betting market in which, say, $200,000 has been bet on MISLEADING and $0 has been bet on FAIR, it becomes something else, a hybrid statement, which differs from the conventional statement in form and meaning.

Whenever a bet offer is made on BB, it is associated in BB's database with a conventional statement on the Internet. Thus, BB is also a press for creating bet-described speech.

Bets on BB Can Be Lie/Mislead Detecting Speech

Consider these subject statements:

So when AT&T cracked through the ceiling of resistance marked by its 200-day moving average, it signaled to Cramer that the stock was finally a good investment or trade — its old roof became its new floor.

"When you see this kind of reliable pattern, as AT&T demonstrated, despite what the fundamental analysts might be saying, you have to use the discipline that these technicians give you to pull the trigger and take advantage of a fabulous buying opportunity," Cramer said.

http://www.cnbc.com/2016/12/28/jim-cramer-teaches-you-how-to-use-charts-to-detect-a-phony-rally-on-wall-street.html

It’s more affordable than traditional gasoline, reduces harmful vehicle emissions, supports nearly 300,000 American jobs and protects America’s energy independence.

http://ethanolrfa.org/consumers/why-is-ethanol-important/

These advancements make all the difference for the patients who have exhausted all previous options for treatment with no success. Envita is truly in a category all its own. Our ability to create customized treatment plans for our patients using the latest cancer targets derived from cancer antigens, genetic biomarkers, and epigenetics combined with personalized delivery of therapies gives our patients a decisive edge in the treatment of cancer.

https://www.envita.com/conditions/cancer

There are bets with play money on BB about all these statements.

In each bet, at the time of this writing, all the money has been wagered on MISLEADING.

If this money were real, and the motive for making the bets was to make a risk adjusted profit, the bet speakers would be saying they believe the odds are greater than 50% that three randomly selected expert-judges will unanimously find that the statements are misleading. And, the market would be saying the same thing.

As these examples illustrate, people can use bets, via the public forum of BB, to reveal that specified statements are misleading. The bets expose and label the statements misleading. Thus, bets on BB are tools that detect (reveal) lies/misleads; in other words, they're lie/mislead detectors.

The "output" of these bets is lie/mislead detecting speech. Put another way, the bets themselves are lie/mislead detecting speech.

To be working lie/mislead detectors, bets ultimately need to be placed and viewed on a bet transaction medium like BB, where other bettors can respond to them. A bet offer without any way of being transacted communicates nothing.

As a platform for lie/mislead detecting speech, BB is a larger lie/mislead detector – a communications medium and device for exposing public lies/misleads.

Bets on BB Can Be Reliable Lie/Mislead Detectors

With rare exception, people don't intentionally make money losing bets when the money at stake is significant to them.

This fact is the reason bets on BB work as lie/mislead detectors, in a range of cases.

Admittedly, this fact is not precise or universal, like a physical law; it's a pattern of behavior that almost always hold true.

It's more than that, though. It's a logical and physical reality because people can't intentionally make large, money-losing bets for long because, if they do, they'll go broke which, of course, prevents any further betting.

This reality means that, in general, people won't intentionally bet that falsehoods are fair statements because those are losing bets. For instance, people won't bet that "Laetrile cures cancer" is a fair statement, because they'll almost certainly lose money.

By this logic, when people are faced with betting about clear falsehoods/lies/misleads, that can be judged, and when the money they would stake has significant value to them, people will reliably abstain or place their money on MISLEADING.

How reliably? That's unknown until measures are devised and experiments run. Data from BB can potentially provide answers to this question.

Bets Can Be Fair Statement Detecting Speech

The inverse use of BB is to detect and validate fair statements.

For example, there is a bet contest on BB about a scientific paper, Phase III double-blind, randomized, placebo-controlled crossover trial of black cohosh in the management of hot flashes: NCCTG Trial N01CC1. At the time of this writing, all the play money has been wagered on FAIR.

If this money were real, the bet speakers would be saying they believe the odds are greater than 50% that three randomly selected expert-judges will unanimously find that the paper is fair. And, the market would be saying the same thing.

As another example, there is a bet contest about the following assertion:

Betspeech can be regulated to further the government's interest without banning that speech outright; a ban is a restriction greater than is essential to the furtherance of that interest.

O'Brien Test Does Not Justify Banning Betspeech

At the time of this writing, all the play money has been wagered on FAIR.

As these examples illustrate, people can use bets, via the public forum of BB, to publicly detect and display that specified statements are fair. Thus, bets on BB are fair statement detectors.

As their platform, BB is a larger fair statement detector – a communications medium and device for validating the accuracy of public statements.

Bets on BB Can Be Reliable Fair Statement Detectors

Just a people generally don't want to lose money when they bet on MISLEADING, they don't want to lose money when they bet on FAIR. Hence, bets on BB can be reliable fair statement detectors.

How reliable? Data from BB can potentially provide answers to this question.

A Detector Limited by the Budget for Judging

Cost fundamentally limits the quest to find truths.

In the case of BB, bets can only be decided when the subject statements can be evaluated for $800 or less, the amount each judge is paid.

Bet speakers can make wagers about subject statements that cost more than $800 to judge but those wagers will either not be judged, or will be judged TOO COSTLY. For example, a subject statement might be, "Terrapower's nuclear reactor is safer than existing nuclear power plants." This statement would cost more than $800 to evaluate.

If BB is permitted to operate in the US, judging fees over $800 will be enabled, expanding the range of statements that can be evaluated by bettors and bets.

Betspeech Can Be Nearly Cost-Free and Risk-Free

A key aspect of betspeech is that it can, paradoxically, cost almost nothing. When one risks money on the side of a bet that is extremely likely to be the winning side, one faces a correspondingly low risk of loss. For instance, one faces virtually no risk if one bets that the following statement is misleading:

"Tens of thousands of fraudulent votes found in Ohio warehouse."

Taking advantage of this risk free-ish aspect of betspeech, BB's rules for putting up money encourage users to make as many bet offers as they want. On BB, users pledge to put up money in bet offers, but only actually put up cash when a bet is sealed, which only happens when there is at least $15,000 wagered on both sides of the bet contest.

It may be, then, that almost all the bets on BB will not be sealed/decided because, in almost all cases, the bet speakers will be betting on nearly sure things, and their wagers will be unopposed. Still, those wagers – those bet offers – will expose misleading statements and validate fair ones.

Prohibition Against Sports Bets and Random Event Bets

BB can potentially be used to enable sports bets and bets on events with random or pseudo-random outcomes. To avoid running afoul of the Wire Act and similar federal and state laws, the administrators of BB will delete all such bets that they are notified about, and the bettors involved will be blocked from using the system. BB is not designed to be a sports betting system or online casino.

Betspeech Can Be Made Safe in Theory

Rules can be made and enforced within BB that limit the amount of money that an individual bet speaker can wager as a percentage of net worth. With properly crafted rules, betspeech can, in theory, be made safe, in the sense that a speaker does not ever risk a large fraction of his or her net worth.

Organizations Can Bet Safely

Anti-gambling laws exist to protect individuals from financial harm, not organizations.

Organizations with adequate communications budgets, can use betspeech with minimal financial risk. For example, the American Medical Association could offer to bet $50,000 that the information at www.garlique.com is MISLEADING. Such an offer would be a trivial risk.

In fact, making a bet offer will usually be less expensive than most other methods of communicating an opinion to the public. That's because a bet offer can remain for an indefinite period of time on BB, and can be found by interested people, at near-zero cost. This contrasts with most advertising methods, which deliver ephemeral messages.

Further, a bet offer only costs an organization money if it loses the bet. Even then, the cost is no worse than the cost of running a conventional ad. With a conventional ad, the money spent is gone as well.

So, why should organizations be barred from spending money on betspeech when they are allowed to spend money on other advertising? What harm is the government protecting against?

Legal Cases Regarding Betspeech Barely Exist

While gambling operators have claimed First Amendment protection for their equipment, the gambling in those cases was not genuinely for communicating. The only case the author knows regarding the question, Can betspeech be protected by the First Amendment?, is the case he brought as a pro se plaintiff in federal court in December of 2003. In this case, he asked for a declaratory judgement protecting him from prosecution for operating a website that would enable betspeech. The defendant, the US Attorney General, argued against First Amendment protection for betspeech.

The district and appeals courts dismissed the case saying the plaintiff lacked standing.

The central question, whether betspeech can be protected by the First Amendment, was not analyzed by either court. The district court did state that, "Placing bets in a commercial setting is obviously outside the ambient of speech protected by the Constitution, even if the bets are made on matters of public interest." However, the district court provided not a single supporting precedent or argument.

Conclusion

BB is an online press that enables people to use specialized bets to describe public statements as fair or misleading. These bets are a novel form of speech. And, this press is a novel lie/mislead detector that enables people to evaluate a broad range of public statements.

If it works as envisioned, BB will spot and label deceptive speech. If it can do that reliably, it can also deter deception, causing speakers of all kinds -- business leaders, companies, non-profits, politicians, government officials, advocates, and judges -- to be more honest.

For these reasons and those below, the author believes BB should be protected by the First Amendment.

Part II: Hypotheses About the Utility of Betspeech

Preface

The discussion above is a recitation of facts. The discussion below is a set of testable hypotheses. If after reading these hypotheses, you believe that BB -- a potential vaccine against misleading speech -- should be banned before it's tested, you might ponder the logic of the scientific method:

"Nor do I set these forth to you as inviolable laws but merely as plausible reasons. For I understand very well that one single experiment or conclusive proof to the contrary would suffice to overthrow both these and a great many other probable arguments."

Galileo Galilei, Dialogue Concerning the Two Chief World Systems – Ptolemaic and Copernican, 1630

Fixing a Basic Limitation of the First Amendment by Changing the Profit and Loss Equation of Public Speech

Revered as it may be, the First Amendment is limited, for it has no rule for rejecting or penalizing propaganda, exaggerations, fabrications, falsehoods, probability lies, and cons.

The First Amendment's defense against "bad speech" is "more speech." The hope or presumption is that more speech will lead to "good speech," which will, sooner or later, "defeat" bad speech.

Naturally, it doesn't always work out that way, as bad speech often wins, often for long periods of time. Pernicious, collectively promoted myths, like the idea that men are smarter than women, can prevail for centuries. Smart, well-funded disinformation campaigns, like those run by the cigarette industry, can work for decades.

In 1953, as the scientific community neared consensus that tobacco products were dangerous, titans of the tobacco industry came together to meet with John Hill at the Plaza Hotel in New York... Hill, the founder of PR conglomerate Hill & Knowlton, recommended that they form a public relations operation, thinly veiled as a scientific institute, to argue that their products were safe. Together, the tobacco executives and Hill created the Tobacco Industry Research Committee, a sham organization designed to spread corporate propaganda to mislead the media, policymakers and the public at large.

Their goal was not to convince the majority of Americans that cigarettes did not cause cancer. Instead, they sought to muddy the waters and create a second truth. One truth would emanate from the bulk of the scientific community; the other, from a cadre of people primarily in the employment of the tobacco industry. The organization launched with an ad titled " A Frank Statement to Cigarette Smokers," which ran in 400 newspapers reaching nearly 43 million readers and stated, "There is no proof that cigarette smoking is one of the causes" of lung cancer [emphasis added].

The ruse continued for almost five decades.

Source: Ari Rabin-Havt (following Allan M. Brandt)

To take a more recent, less cliché case, Elon Musk, CEO of Tesla Motors, has been running a public fraud since at least 2013, in which, to raise money and inflate his company's stock price, he announces vaporware products that Tesla can't make, including a miraculous 90-second battery swapping system, a solar shingle that competes with conventional solar panels on price, a full self-driving car using 8 cheap cameras and an outdated radar, a fleet of robo-taxis that will pay for themselves, and an electric semi-truck that defies the laws of physics. His bogus claims have been amplified and validated by media, like electrek.com, which has run over 90 stories on the fantasy Tesla Semi, and which has a vested interest in Tesla's stock price going up. Given this fake, external validation, millions of retail investors believe these lies, so despite losing money every year since its inception in 2003, Tesla Motors continues to raise capital from these investors, aided and abetted by Goldman Sachs, Morgan Stanley, Citibank, and other banks that publish speciously bullish reports on the company, to justify the capital raises and collect fees.

We all know bad speech often beats good speech. Why does it win?

That's unclear.

One reason is human ignorance; people can't help but spread and absorb bad information.

Beyond ignorance, three economic facts may account for a significant fraction of the intentionally misleading speech that exists in the world:

  1. Speakers often benefit from creating and spreading misleading speech.
  2. Speakers often face little or no penalty for creating and spreading misleading speech.
  3. Speakers usually lose time and money when they debunk misleading speech.

Think of any misleading statement you've read recently. What's the financial incentive for you to attack it? How would you afford the research necessary to refute it? If you wanted to attack it and had the facts, how much would you pay to disseminate your refutations? Where would you advertise your good speech? Above all, how would you recoup your investment?

The truth is, there is an economic asymmetry in public communication:

Telling lies is often profitable. Debunking them is usually unprofitable.

Public lying can be reduced if this economic equation is changed such that telling lies costs a speaker money and debunking them is profitable or nearly free.

Properly crafted bets can do that.

First, they can cost nearly nothing to make.

Second, they can change the economics of public speech because they are the unique form of speech that financially penalizes speakers who lie/mislead.

Third, they can change the economics of public speech because they are the unique form of speech that financially rewards speakers who attack lies/misleads.

On BB, debunkers believe they will profit if their bets are accepted. In other words, on BB:

Bets create a new business model for debunking.

Defeating Well-Funded Misleaders

Bets can also nullify the advantage of well-funded misleaders because betting markets will happily take as much money as any well-funded speaker will offer on a really bad bet. If the tobacco company, Altria, wants to bet $1 billion that, "There is no proof smoking is a cause of lung cancer," is a fair statement, the market will gladly take $1 billion from Altria.

Overcoming the Cost of Impressions to Repel False Accusations

If a statement appears in the media and is exposed to a large audience, then to refute that statement one must purchase access to that audience; one must purchase the impressions. Usually, this cost obstacle is extreme and insuperable – imagine trying to buy a series of TV ads to refute a series of ads about a garlic pill. This kind of purchased refutation almost never happens because of the cost.

And yet a BB bet can potentially overcome this obstacle for a key segment of the audience, the segment that is interested in the subject of the ad. How?

To continue with our example, anyone interested in garlic pills from a particular company can, in theory, look up statements by the company on BB and find out what bettors think about the company's statements. Thus, the easy ability to look up statements by speaker and subject can potentially overcome the power of impressions, provided audience members want to do the look up.

Weapon to Repel False Accusations

If a person is slimed on the Internet, what's the recourse? Anne Applebaum, a victim of a smear campaign on multiple websites, makes the point:

"There was no way to correct the stories — to whom would I complain?"

In many cases, bets may be the only cost-effective weapon that people can use to refute false accusations, especially those made on the Internet.

A victim of false accusations can challenge her accusers to bet. If the accusations are specific and checkable at an affordable cost, bets can repel them, because smear artists will lose those bets.

Smear artists will refuse to bet, of course, but when they do that, they may indict themselves and exonerate their victims.

Cheap Fact Checking by Bets – Fakers Will Fold

Bets on BB can have big cost advantages over other fact-checking methods.

Imagine a list of 100,000 statements of purported facts by different speakers. To hire researchers to check every "fact" would entail a labor cost per fact.

A far cheaper approach is to challenge the speakers to bet that their statements are fair. The challenges can be implicit, in which one could be expected to bet on every important, checkable assertion that one makes. Or they can be explicit, in which random users and experts who see "facts" that they know are false can challenge the speakers by betting that those "facts" are misleading.

This fact checking method can work because, in most cases, fakers know they're faking. They won't bet that their statements are fair. They'll fold, their bluffs having been called. In fact, one way of looking at BB is that it's a press for enabling people and organizations to call public bluffs.

Consider social media sites, such as Twitter, which say they are trying to fight disinformation, yet plead that they can't police their users because it would be too costly.

Bets, such as the bets on BB, can potentially solve some of that problem. Users who spread lies can be caught out by other users who bet against them. For example, Cameron Harris, who created the headline, "Tens of thousands of fraudulent votes found in Ohio warehouse," and spread it on social media, would have been caught out by users who bet against him. If he was not willing to back his false statement with a bet, it might not have been believed.

Browsers can include a tool in which any reader/viewer could highlight any statement on a webpage and bet that it was fair or misleading. It's efficient fact-checking by exception.

Cheap Fact Checking by Bets – Experts Can Surface Their Knowledge

A second reason that bets can be used to efficiently check facts is that experts usually exist who know as much about the subject of a misleading statement as the creator of the statement. By expert we mean someone who knows the ground level reality of a subject statement, the facts such as they are known. Bets allow these experts to surface their knowledge and trump deceptive speakers who refuse to bet.

As an illustration, take a look at the advertising of Remifemin, a product you've probably never heard of. If you search "Remifemin" on current search engines, you'll see dozens of links to content that tells you that Remifemin, an herbal formulation, might alleviate hot flashes caused by a lack of estrogen in menopause. For example, if you click on one search result, http://www.remifemin.com, you'll see a website that states:

Remifemin:

The safe, natural alternative to HRT

Menopause Symptom Relief*

Find relief from hot flashes, night sweats and mood swings with Remifemin - estrogen free, black cohosh with over 60 years of use worldwide.*

In reality, all the double-blind, placebo controlled trials of Remifemin (and its key ingredient, black cohosh) have shown that Remifemin is no better than a placebo; it's snake oil. The investigators who conducted those trials (and the people who know their work) can confidently bet that the statements promoting Remifemin are misleading.

In our current media systems, experts can and do, of course, make accurate statements. But, those fair statements are often lost in a blizzard of better-financed, plausible sounding bunk, pushed prominently onto those media systems by the profit motive. Almost all the links in a Google search on "Remifemin" lead to write-ups like this one found on drugs.com:

Remifemin Menopause is a unique, natural formula. For over 40 years in Europe, it has helped reduce the unpleasant physical and emotional symptoms associated with menopause, such as hot flashes, night sweats and mood swings. Clinically shown to be safe and effective. Not a drug.

How is a non-expert to know which statements to believe?

Betbacked statements may be an answer because they are, on average, more believable than conventional statements.

For example, imagine there were five real bet offers on BB, totaling $50,000, saying the content at https://www.drugs.com/drp/remifemin-menopause-tablets.html is MISLEADING, and there was no bet offer saying the content is FAIR.

Now, which would be more believable, the content about Remifemin on drugs.com, or the bet offers saying that that content is misleading?

Baby Step

The discussion above makes betspeech sound like a miracle, a low cost, practical lie/mislead detector easily applicable to any public statement. But, it's not. More likely, betspeech will not apply to most of the important questions of public discourse, because bets about complex questions (e.g., Are school vouchers a good idea?) may need to be complex themselves, and may take years and millions of dollars to decide. Few people will want to engage in long-dated bets with controversial terms and high costs.

Moreover, most people probably won't bet because they're not used to it, because they oppose betting, or because they don't want to be honest. The fact is, a lot of business and political speech is intentionally biased, and the speakers will not want to bet on what they're saying.

So, just as people once invented the easy-to-use idea of stock – a simple, if flawed, way to invest in companies, which compressed the complexity of businesses and investment contracts into a single price – inventors will have to design easy-to-use bets that reward honesty and penalize dishonesty.

BB is a first step, one that should be protected by the First Amendment.

Footnotes

The scientist is in bondage to that conception of truth which has brought it about that aircraft fly and physicians sometimes cure their patients. It is the "correspondence theory of truth," which Alfred Tarski has done so much to clarify. He put it thus: "A true sentence is one which states that a state of affairs is so and so and the state of affairs is indeed so and so." For example, the proposition "The atomic weight of potassium is 39" is true if and only if the atomic weight of potassium is indeed 39. Such a declaration always excites a derisive bray from the philistines who see in it still further evidence of the philosophers'' preoccupation with trivialities. To say or think so is, however, to miss the point. What Tarski is in effect saying is that the notions of truth and falsity are metalinguistic concepts, for it is only sentences or "propositions" of which truth or falsity can be affirmed or denied. Any such affirmation or denial must therefore be a statement about a statement, delivered in that language – metalanguage – in which we discourse about language.

Peter B. Medawar, An Essay on Scians (in The Limits of Science)

A bettor's calculation for deciding whether to make a debunking bet will, in theory, take into account:

A Clue to the Government's View

The author, holder of expired US Patents 5,575,474 and 6,443,841, both entitled A Communications System Using Bets, established a website, betpress.com, to practice the patent and enable people to make bets with variable odds on questions of public interest, for the purpose of communicating. Betpress.com did not take bets because the author feared prosecution. Instead, the author filed a complaint in federal court, in December of 2003, asking the district court in Arizona to declare that the First Amendment protected him from being prosecuted for enabling speech bets.

The district court and the Ninth Circuit Court of Appeals found that the author had not demonstrated a credible threat of prosecution, and therefore did not have standing to ask for a declaratory judgement. Thus, the case was dismissed.

Citing no precedents, the district court also stated that the author did not have a "colorable" [plausible] First Amendment claim. The appeals courts did not opine on the First Amendment question.

In the course of the author's appeal from the district court, the Department of Justice filed an appellee brief stating why bets used as speech could be banned. In this brief, the government held that bets are conduct that the government has the right to regulate. It further held that even if bets are viewed as speech, that speech can be regulated/banned according to an O'Brien test:

"A government regulation is sufficiently justified if it is within the constitutional power of the Government; if it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression, and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest."

There are at least four reasons why an O'Brien test does not justify banning betspeech:

  1. betspeech can be regulated to further the government's interest without banning that speech outright; a ban is a restriction greater than is essential to the furtherance of that interest.
  2. anti-gambling laws (and the O'Brien decision) did not anticipate and should not apply to the productive uses of bets as speech, which were not known when those laws were passed (and are still virtually unknown).
  3. there are classes of bet speakers, especially organizations, that anti-gambling laws were not intended to regulate.
  4. betspeech can be made safe for individual users if safeguards are built into a bet press that enables that speech.

This paper on the legality of BB in the US is long. The short version might be three facts:

  1. Congress shall make no law abridging the freedom of speech, or of the press.
  2. Bets can be used as speech to express facts and opinions.
  3. A ban on bets used as speech is a restriction greater than is essential to the furtherance of the government's interest in regulating betting.

It follows from these facts that some forms of betspeech are legal for some classes of bet speakers.

Key Documents in the Case

Initial Complaint Seeking First Amendment Protection (December 22, 2003) Download (PDF)

District Court's Decision to Dismiss (May 25, 2005) Download (PDF)

Appellant's Opening Brief (September 9, 2005) Download (PDF)

Government's Appellee Brief (October 11, 2005) Download (PDF)

Appellant's Reply Brief (October 26, 2005) Download (PDF)

Ninth Circuit Court of Appeals Ruling to Affirm Dismissal (December 12, 2006) Download (PDF)

Appellant's Petition for Rehearing En Banc (January 26, 2007)(petition was denied) Download (PDF)