Fortunately this market is using play money and thus legal. Only prediction markets that deal in fiat have had problems. See hollywood stock exchange for an example.
H$ is play money. Crypto currencies aren't play money. You can't cash out of H$, whereas you can cash out of bitshares or bitcoin or any other alt coin with tangible profits. That is what governments are concerned about, particularly with crypto currencies. People stand to profit from them while governments are uncertain of how to take a piece of that profit.
Calling crypto currencies play money is a very questionable response to my question...
You can cash out of Linden Dollars too. Whether it is legal or not in your jurisdiction does not change the fact that it is perfectly legal to develop open source software and publish it as free speech.
The laws do not compile and there are 1000 ways to interpret everything as either legal or illegal.
Second life contains a virtual economy, it does not constitute a platform for betting, which is precisely how the us government will look at bitshares and any other prediction markets that result from its development. From an investors point of view this presents significant risk. If your product does not comply with the regulations of major governments I don't believe it will be adopted. If you cannot assuage these concerns how can I or anyone else rationally invest in your product?
Second Life has gambling platforms built into the game. Just because you can use a currency for 'gambling' doesn't mean it is regulated.
For one thing betting is just one way of looking at this, another is that it operates no differently than a Credit Union or Bank. It lends dollars into existence based upon collateral (stock in the bank). In this sense it is little different than Bitcoin or any 'regulated' bank except that it is entirely transparent and 200% reserve rather than fractional reserve.
I would contend that whether you call it a prediction market, a bank, a currency, an equity, or anything else that the regulators rules do not accurately apply. It should really be considered a "math-based digital asset" as the W. Twins filed in their application with the SEC. These instruments are entirely NEW.
Worst case scenario the US government outlaws even running the application as an end user, it will become like drugs inside the US and likely result in the banning of Bitcoin as well. The US market is only 4% of the worlds population and the benefits offered by our products can produce trillions of dollars of value to other parts of the world where it will be legal.
As someone giving to our cause ("Capitalism takes more people out of poverty than Aid") by donating to one of our addresses or buying PTS you should be considering the global impact of these technologies and not just US centric regulatory views. We are focused on keeping our legal exposure as small as possible so we can impact the masses who are unbanked.
"Bono says capitalism takes more people out of poverty than aid."