Many still dislike the idea of governments encouraging citizens to gamble. Yet regulating something is not the same as encouraging it. Better to treat gambling in the same way as smoking: legalise it but make the casinos display the often-dismal odds of success (one in 176m, if you hope to win America’s richest lottery) in the same way that cigarette packets warn you about cancer. That would favor games of skill over the mindlessness of slot machines. People always will bet. Better that they do so in a legal market—and know the [tax] form.--Economist
As readers familiar with my views know, the best thing about this is the positive externality of getting better price signals from prediction markets, currently hampered by existing legislation.
Here is a piece on the law I wrote back in 2006.