Lottery - Decision to not continue with idea

I wanted to first understand regulatory constraints:

  1. Very clearly prohibited in California. See penal code section 319.

Innovators often go against regulation, but it has to be worthwhile on two fronts:

  1. Is this idea worth pursuing?
    1. Is this significantly better for consumers?
      1. Partial yes. It’s vaping vs. cigarettes. Odds are better, but there is new risk (smart contract risk).
    2. Is there significant business opportunity?
      1. Yes. I think so, but that’s also because regulation forbids competition.
      2. By launching a protocol, it’s a way to say I have no control, and unclear if that meets the bar for regulation.
    3. How much do I personally care about this?
      1. I like 1) the protocol aspect to making a significantly better system, and 2) how it’s not trying to skirt away from user’s revealed preferences.
      2. However, I’m not the target audience for this.
      3. I don’t feel strongly enough about this to test any legal boundaries.
  2. Will consumers have my back? The ones that succeed against regulation usually are ones that users love and are vocal about - Uber, Airbnb, Apple’s antitrust, etc.
    1. Would users be extremely disappointed if they couldn’t use it anymore?
      1. Somewhat.
    2. Are users happy after they use your product?
      1. Not really.

Thus, a no for now.

  • This would change if there is a path to being regulated.
  • Kalshi spent 1.5 years speaking with regulators to get permission, and now owns US market
  • Contrast this to Polymarket’s approach, which was to launch, then shut down their US product after gov’t came after them
Regulatory constraints