An online gambling platform could do to the neighborhood bookie what electric refrigerators did to the ice delivery man.

Coming this fall, Augur will allow participants to wager money on any future event of their choosing. Software will set the odds, collect the bets, and disperse the winnings. The price alone should give Nevada sportsbook operators pause; an estimated one percent of every pot will go to keep the system running. The average vig today is about 10 times that.

Augur isn't a full-fledged casino. You can't play roulette or poker, and running lotto on the platform would be tricky. But it'll be great for sports betting.

Here's what's truly novel about Augur: It won't be controlled by any person or entity, nor will it operate off of any one computer network. All the money in the system will be in Bitcoin, or other types of peer-to-peer cryptocurrency, so no credit card companies or banks need to be involved. If the system runs afoul of regulators—and if it's successful, it most certainly will—they'll find that there's no company to sue, no computer hardware to pull out of the wall, and no CEO to lockup in a cage.

This is new legal territory. If Augur catches on as a tool for betting on everything from basketball games to stock prices, is there anything the government can do to stop it?

Augur is a decentralized peer-to-peer marketplace, a new kind of entity made possible by recent breakthroughs in computer science. The purpose of these platforms is to facilitate the exchange of goods and services among perfect strangers on a platform that nobody administers or controls. Augur's software will run on what's known as a "blockchain"—a concept introduced in 2008 with the invention of Bitcoin—that's essentially a shared database for executing trades that's powered and maintained by its users.

Bitcoin's blockchain was designed as a banking ledger of sorts—kind of like a distributed Microsoft Excel file—but Augur will utilize a groundbreaking new project called Ethereum that expands on this concept. Ethereum allows Augur's entire system to live on the blockchain. That means the software and processing power that makes Augur function will be distributed among hundreds or thousands of computers. Destroying Augur would involve unplugging the computers of everyone in the world participating in the Ethereum blockchain.

If Augur is destined to become the cypherpunks answer to gambling prohibition—the betting man's version of the online drug market Silk Road if you will—you'd never know it from talking with its developers. They work for a San Francisco-based nonprofit, attend conferences, have legal representation, and talk openly about what they're up to with reporters. Augur even commissioned one of those cheesy motion graphics promotional videos favored by new tech startups.

About half of the roughly $600,000 raised by Augur's development team comes from Joe Costello, the successful tech entrepreneur who was once Steve Jobs' top pick to become the CEO of Apple.

Joey Krug, a twenty-year-old Pomona college dropout and Augur's lead developer, never uses the world "gambling" to describe his venture. He and his team of five employees call Augur a "prediction market," a term that emphasizes the information generated when a bunch of people have a financial incentive to feed their expertise into a sophisticated algorithm.

With Augur, as bettors move money in and out of the pot, the odds adjust. This yields publicly available statistics that should carry weight because they're derived from the opinions of a crowd of people with a stake in the results. InTrade, for example, the best-known prediction market until federal regulators forced it to stop serving U.S. customers in 2012, beat the pollsters and pundits by foreseeing the outcome of the 2008 presidential elections in 48 out of 50 states.

Augur's developers hope that their platform will make it possible to do a Google search to look up the likelihood of some future event. This could usher in a better world, with more informed policy decisions and less malinvestment.

But Augur also serves the less high-minded—though no less noble—purpose of providing cost savings and convenience to gamblers. Restrictions on gambling serve to protect government revenue at the betting man's expense. State-sanctioned casino operators pay high taxes, and state-run lotteries fleece their customers. But there's no logical or moral case for government restrictions on gambling, since no third party is harmed when consenting adults wager money on the future. Augur actually has the potential to make the world safer by taking away market share in the gambling industry from criminals.

And yet sports betting is illegal in most states, and prediction markets are tightly regulated by the Commodity Futures Trading Commission (CTFC). The agency sued Ireland-based InTrade in 2012 to prevent it from accepting bets from U.S. customers. (The company folded shortly after.) In 2013, the CFTC and the Securities and Exchange Commission (SEC) jointly sued the prediction market Banc de Binary for allowing U.S. customers to make bets on commodity prices.

The CFTC has approved other prediction markets, such as the New Zealand-based PredictIt, but only after it agreed to abide by the agency's restrictions.

Krug says the Augur team is planning to meet with CFTC staff go over how their system works before it's launched, but says he's not overly concerned. "Our friends in Washington, D.C. say the CFTC will probably just dismiss Augur and say it's not a big deal," Krug told me in a phone interview.

That doesn't sound like much of a legal strategy, but how do you have a legal strategy when you're building something unlike anything that's ever existed? Federal anti-gambling laws, such as the 2006 Unlawful Internet Gambling Enforcement Act, target the companies that facilitate online betting— website operators, credit card companies, banks—not individual gamblers.

Augur's biggest legal vulnerability is the community of human "reporters" who are needed to settle bets on the platform, says Cardozo Law School's Aaron Wright, who is writing a book about the legal implications of blockchain technology. Let's say a group of people wager money on Augur over the outcome of a boxing match. Once the bout is over, human participants (who receive a portion of the trading fees as compensation) must report the outcome to the system before Augur's software will disperse the money to the winners. "There's at least an argument that the people doing that reporting are aiding or abetting unlicensed options and could be prosecuted," says Wright.

But Augur doesn't collect personal information on any of its users, so identifying these people could be difficult. And Augur is a borderless technology, so U.S. gamblers could simply rely on foreigners to report on the outcomes of their bets.

One attorney I spoke with suggested that the team that's building Augur could be brought up on charges for aiding and abetting a criminal conspiracy. Nate Cardozo, a staff attorney with the Electronic Frontier Foundation, thinks that's far-fetched but says he can't rule it out. Cardozo emphasizes that writing open source software doesn't necessarily protect the team from prosecution.

"We've taken the steps that we need to take in order to bracket the individual's risk and the organization's risk," says Augur's attorney, Marco Santori, who declined to comment further on exactly what those steps might entail.

Even if Krug and his colleagues were to face criminal prosecution, the technology would live on. After Augur is born into the world, the development team could release a software update that would cripple the system. But in that case, Augur's users could band together to block any changes to the underlying code, or another developer could copy the open source code and simply re-launch the platform.

The big question with Augur—and with blockchain platforms more generally—is whether they can outrun our regulatory state long enough to grow so large and popular that they're truly unstoppable. My money's on Augur in that race.

For more on the promises and pitfalls of decentralized peer-to-peer marketplaces, read my recent Reason magazine feature story on the topic.