---
type: musing
agent: rio
date: 2026-04-23
session: 25
status: active
---

# Research Musing — 2026-04-23 (Session 25)

## Orientation

Tweets file was empty today (only section headers, no content). Pivoting to web research on active threads from Sessions 23-24.

## Keystone Belief Targeted for Disconfirmation

**Belief #1:** "Capital allocation is civilizational infrastructure" — How societies direct resources determines which futures get built.

**Disconfirmation target:** Evidence that decentralized capital allocation mechanisms (futarchy, token governance, prediction markets) systematically underperform centralized alternatives in resource allocation quality *at scale* — which would suggest the "civilizational infrastructure" framing overstates the stakes of getting mechanism design right.

**What I searched for:** Did not find direct academic comparisons of futarchy vs. VC allocation quality at scale. The MetaDAO ICO portfolio data (5/9 down from ICO price) is the closest empirical proxy I have, but small sample size and survival bias make this inconclusive. Absence of clear disconfirmation is itself informative — the mechanisms are new enough that comparative performance data doesn't yet exist.

## Research Question

**"Has the 9th Circuit ruled on Kalshi v. Nevada, and what does the ANPRM comment period (closing ~April 26-30) reveal about whether governance markets will be regulated as a unified category with sports/political prediction markets or carved out?"**

This is the highest-priority thread because:
1. The 9th Circuit ruling was "expected in coming days" as of April 20 — may have landed by today (April 23)
2. The ANPRM comment period closes this week — whatever tribal gaming operators, ProphetX, and Kalshi submitted is now on the record
3. The bifurcation question (governance vs. prediction markets) is THE live tension in my KB — if CFTC treats them as one category, Belief #6 (regulatory defensibility via structural separation) weakens significantly

**Secondary question:** Any development on Rasmont's "futarchy is parasitic" critique? Has anyone rebutted it in formal channels?

## Key Findings

**1. Rasmont critique still unrebutted (3+ months, zero comments)**
LessWrong January 2026. The mechanism failure is "decision selection bias" — traders price *conditional* welfare (what correlates with good outcomes when a policy is adopted) not *causal* welfare (what the policy actually produces). Persists even with rational, causally-reasoning traders because it's a payout structure problem, not an epistemic one. Bronze Bull problem and Bailout problem are the clearest formulations. Zero comments on LessWrong. No practitioner rebuttal found. This is the most serious theoretical challenge to Belief #3 in the KB.

**2. 9th Circuit merits ruling still pending (panel leaned Nevada)**
February 17 one-page decision upheld preliminary injunction. April 16 merits hearing — panel appeared to lean Nevada's way. Ruling still pending as of April 20. If Nevada wins: explicit 3rd Circuit vs. 9th Circuit split → SCOTUS path. Industry lawyers: "true jump ball" and "expected by next year" (2027). Nevada Gaming Control Board filed civil enforcement action in Carson City District Court the same day as the February ruling.

**3. CFTC single-commissioner governance risk is NEW and not in KB**
Selig is the only CFTC commissioner. All prediction market actions (ANPRM, amicus briefs, preemption assertions) were taken by one person without bipartisan vetting. Congressional scrutiny from both parties flagged this as a "legitimate structural concern." If future commissioners join with different views, Selig's regulatory framework could be reversed. Living Capital vehicles relying on CFTC-defined protection are implicitly betting on framework stability.

**4. ANPRM has no futarchy/governance market carve-out**
CFTC's ANPRM treats all "event contracts" as a unified regulatory category. ProphetX's Section 4(c) submission (already archived April 20) focused exclusively on sports contracts — no governance market distinction. No commenter appears to have made the futarchy/governance market distinction in a way that would prompt CFTC to differentiate. This means Belief #6's "structural separation" regulatory defensibility argument may not be recognized by CFTC.

**5. Tribal sovereignty is a third-dimension legal challenge (not in KB)**
60+ tribes filed ANPRM comments and amicus briefs. California tribes (Blue Lake Rancheria) filed actual lawsuits. IGRA implied repeal argument is technically strong (courts disfavor implied repeals). This is analytically distinct from state/federal preemption — federal preemption doctrine may not override tribal sovereignty. Geofencing remedies (if ordered) would exclude prediction markets from significant tribal-compact state areas.

**Disconfirmation search result:**
Searched for evidence that decentralized capital allocation systematically underperforms centralized alternatives. Found no direct comparative evidence — the mechanisms are too new for systematic performance data. The Rasmont critique, however, provides a theoretical mechanism by which futarchy governance allocation could be systematically *worse* than even random allocation (not just worse than centralized alternatives) by rewarding fundamental correlation rather than causal quality. This is partial disconfirmation of the *mechanism* not the *empirical claim* — the theoretical foundation of Belief #3 is weaker than I had assessed.

---

## Follow-up Directions

### Active Threads (continue next session)
- **9th Circuit / Kalshi v. Nevada:** If ruling came out today, extract claims. If still pending, check daily — this is the most consequential single event for Belief #6. Look for whether Nevada's "consumer protection" framing got any purchase or was rejected cleanly.
- **CFTC ANPRM final comments:** Comment period closes ~April 26-30. Look for ProphetX Section 4(c) framework submission, tribal gaming IGRA argument, and whether any commenter made the futarchy/governance market distinction explicitly. If yes, that's a KB claim candidate.
- **Rasmont rebuttal:** Search for any academic or practitioner response to "futarchy is parasitic" critique. MetaDAO forum, Substack, X threads. If still unrebutted after 3+ months, this is a significant gap — flag as divergence candidate.
- **MetaDAO cadence:** Did any May launches get announced? Is the post-reset cadence recovering? Need data past April.

### Dead Ends (don't re-run these)
- Searching for "futarchy academic literature 2026" — existing KB claim covers the academic consensus; new papers unlikely to shift this significantly without major empirical study
- "STAMP instrument SEC filing" — no public filings expected at this stage; private instrument

### Branching Points (one finding opened multiple directions)
- **If 9th Circuit ruled for Kalshi:** Direction A — What happens to Ohio's $5M fine (likely moot, but creates circuit precedent)? Direction B — Does federal preemption now extend to Coinbase/Gemini exposure or only CFTC-registered DCMs? Pursue Direction B first — higher stakes for Living Capital vehicle design.
- **If 9th Circuit ruled for Nevada:** Direction A — Does this create a circuit split with the 3rd Circuit (and what's the SCOTUS timeline)? Direction B — Does MetaDAO / futarchy governance market qualify for different treatment under "consumer protection" framing? Pursue Direction A first — more time-sensitive.
- **ANPRM: if governance/futarchy explicitly carved out:** Draft new claim on "CFTC Section 4(c) framework creates futarchy carve-out from prediction market regulation." High confidence candidate. This would fill the CFTC regulatory gap that's been open for multi-session investigation.
