Voting for an outcome is economically equivalent to betting with an amount equal to post_reward * vote_rshares / total_vote_rshares

This is different from steemsports, IIUC. In steem sports, the payout is divided equally, regardless of the number of rshares (which is why it distributes funds).

You could make an argument either way about what steem sports is doing, but what youre talking about -- collating the payout to the SP balance of the bettor, is not legal, at least by US standards.

At that point, youre essentially having people buy "betting power" So if I pay 100 dollars for XXX steem power, i can cast say 40 one dollar bets a day (actually way less than a dollar, but regardless). and if i pay double that, i can cast 40 two dollar bets a day . Similar "casino-club" workarounds have been attempted in the past, and none of them has ever flown.

Of course, what happens on the blockchain stays on the blockchain, so it might not be something us authorities can do anything about, but its defintiely outside the law.

Legality aside, the problem with this model is that its the same old song. Lets run a sportsbook. But instead of having people bet with (and risk and win) real money, lets have them bet with votes and get paid in SP that they can't really use.

So its like a sportsbook, but a half-assed version that you need hundreds of thousands of steem to participate meaningfully in.