This is such a simple and obvious idea, I don't know why no one thought of it before.
Sen. Maria Cantwell wants to use state gambling laws to regulate parts of Wall Street, saying someone needs to police financial markets where "casino capitalism" involving highly speculative trades she likens to sophisticated betting continue unabated and threaten to create yet another financial crisis.
"She's going for their jugular," Michael Greenberger, a University of Maryland law professor, said of the effort by Cantwell, a Washington state Democrat. Greenberger was a top official at the Commodity Futures Trading Commission during the Clinton administration who unsuccessfully fought to regulate such trading.
Cantwell wants to repeal parts of a 2000 law that barred states from using their gambling laws to help rein in the nearly $600 trillion derivatives market.
The senator's effort comes as Congress is starting to consider tightening federal regulation of financial markets in the wake of the current economic downturn. Cantwell said she's not convinced Congress will take strong enough action and, as a backup, wants to give state attorneys general the power to act.
Cantwell's proposal, besides making good sense, is based on an idea that predates even the New Deal.
In the early 1900s, gaming establishments known as "bucket shops" allowed people to place wagers on whether a stock would go up or down without actually buying the stock. States banned such betting after the economic crash and the panic of 1907.
In 2000, Congress attached the Commodity Futures Modernization Act to a must-pass, 11,000-page omnibus spending package that provided funding for a handful of Cabinet departments and other federal agencies. The bill essentially deregulated the commodities markets and pre-empted the states from applying their "bucket shop" or other gambling laws.
The fact that the bill specifically exempted derivatives from being regulated as bucket shops shows that this is exactly what they are. Wikipedia defines bucket shops as:
Bucket shop is a brokerage firm that "books" (i.e., takes the opposite side of) retail customer orders without actually having them executed on an exchange. These brokerages are also often called boiler rooms. The term is a defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop.  Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Alternatively, the bucket shop operator "literally 'plays the bank,' as in a gambling house, against the customer."  Operating a bucket shop would also likely involve violations of several provisions of US federal securities or commodity futures laws.
Cantwell is one of the few in the Senate who have actually stood up for the public in the past. In the aftermath of the West Coast electrical price spike of 2000-2001, she helped release audio tapes of Enron traders bragging about their schemes to drive up prices in an effort to force the Federal Energy Regulatory Commission to do their job.