Last week’s post on taxing Wall Street trades prompted a heated discussion about the value (or lack of value) of certain Wall Street activities. Here’s the sequel. A senator wants to use state gambling laws to regulate parts of the Street.

Washington state Democrat Maria Cantwell is particularly concerned about the $600 trillion derivatives market. She wants to repeal parts of a 2000 law that prohibited states from using their gambling laws for derivatives regulation. Cantwell isn’t convinced Congress will do enough in this area, so she’s hoping states might step in if Congress drops the ball. More from McClatchy:

There is precedent for state gambling laws being applied to financial transactions.

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 CBC’s Washington correspondent assesses Cantwell’s proposal this way:

It isn’t likely her effort will fly, but her logic is sound. This country not only allows financial institutions to keep on making bets that could ruin everyone, it’s actually been providing the money for some of the action.

Like sheep for the shearing. As my friend the PR pro used to say, you can make nice warm mittens out of most voters.

Ouch.

But on the subject of gaming laws and Wall Street, this proposal seems reasonable, unless you buy the idea that derivatives are “God’s work.”

Cantwell uses another term: “Casino Capitalism,” which is why she wants to regulate via gambling laws.

Your thoughts?