The Law and Logistics of a Fake News Futures Market

This is my last blog post in a multi-part series on conspiracy theories

I made a “modest proposal” in my previous post. I proposed the creation of a “Fake News Futures Market.” Because fake news and conspiracy theories can threaten liberal values, my ultimate goal is to create a kind of “early warning detection system” as well as a literal marketplace of ideas through a user-friendly market mechanism that not only assigns credible probability values to each new item of fake news or conspiracy theory but that also updates these probability values in real time. By way of background, my previous mechanism design work has extended the logic of markets to adjudication and jury trials (“The Case for Bayesian Judges,” “Why Don’t Juries Try Range Voting,” and “The Turing Test and the Legal Process”) and to many other novel settings, including politics (“Coase and the Constitution”), moral dilemmas (“Trolley Problems”), and the world of science fiction (“Clones and the Coase Theorem”). I now want to extend my work into the domain of conspiracy theories and fake news generally. To do this, I will have to address the following logistical and legal questions:

Law. A prediction market in conspiracy theories or “fake news futures market” poses a delicate legal question: Would such a market even be legal, or would the bets placed on this market be classified as illegal wagers? The answer to this threshold question often depends on State law (see here, for example). By way of analogy, sports betting is legal or on the way to becoming legal in 42 States (see image below), although as far as I am concerned, why can’t the act of placing a wager on a non-sporting event be considered a speech act, and why shouldn’t betting markets thus be protected under existing Supreme Court interpretations of the First Amendment, at the very least as a form of commercial speech? To make a long story short, I will devote myself to these threshold legal questions during my summer break.

Logistics. What would a “fake news futures market” look like? How would such a platform operate? How much would it cost to place a bet? At this early stage of my research project, I see three possibilities. One is to hand the baton to an already-established prediction market like the Iowa Electronic Markets (IEM). Another possibility is to create a new fake news betting platform with the support of a market-friendly research institution, like the Cato Institute or the Mercatus Center at George Mason University. Yet another possibility is to “go independent” by creating an entirely new and independent platform not affiliated with any existing research institution. (By way of comparison, consider the “Long Bets” website, an independent entity that was initially funded by two grants from Amazon CEO Jeff Bezos.)

Additional design questions (e.g. marketing, advertising, etc.). Lastly, for now, with the legalization of sports betting in many States (see my “Law” section above), the online betting world is becoming hyper-competitive, full of established players like DraftKings as well as many new entrants too numerous to mention here. How could a fake news market differentiate itself from this crowd and attract bettors?

However the above questions are answered, my fake news futures markets fake should resemble existing successful prediction markets, like the IEM or Long Bets, in two ways: it must contain a searchable and comprehensive database of conspiracy theory wagers, and the price of any given bet should reflect the relative truth value of the item of fake news or conspiracy theory being bet on. Again, I will consider these logistical and operational details over my summer break. The larger point I want to make here, however, is that governmental efforts to suppress fake news and conspiracy theories are not only likely to fail; such efforts will further erode and endanger our freedoms. Instead of stifling speech, we should try a different approach: we should allow people to propose–and bet on–as many items of fake news and conspiracy theories as they want to!

sports betting laws in every state
Image credit: Shayanne Gal (Business Insider)

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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3 Responses to The Law and Logistics of a Fake News Futures Market

  1. If my understanding is correct, this sounds like a novel application of trial based Range Voting. I hope I am on point.

    • Absolutely! The placing of a bet is very much in the spirit of “range voting,” since the amount one is willing to bet will reflect the relative intensity of one’s beliefs! This idea deserves a blog post of its own…

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