If binary options are legal, could a company create an exchange similar to Betfair where two parties would each take one side of a prediction if a price where to exceed or be below at a certain point in time? While it sounds a lot like gambling, I can't see a considerable difference between this concept and binary options (where you're putting money down that a price will be higher or lower at a point in time...with neither party owning any shares or even being affiliated with the exchange). In fact, it sounds quite similar to options contracts themselves (without the ability to exercise them). I realize there's a lot of legal research that would need to go into identifying a difference, but could someone answer in basic terms the difference between the two concepts?