Suppose that, as seems not just likely but well-neigh inevitable, Augur ends up hosting transactions considered illegal under some jurisdictions. This might be the case, for instance, if a U.S. resident used Augur to transact in claims about sporting events. Granted that, as a P2P decentralized exchange, it would be difficult for regulators or prosecutors to shut down Augur as a whole. Granted, too, that it would be difficult for them to go after individual users. But what would prevent them from going after Augur developers and individuals participating in the Forecast Foundation on grounds that they have knowingly aided and abetted those illegal acts?
First of all, I am not a lawyer, and am merely explaining my understanding of the terms.
In their terms, Augur requires users not to use a "Communication Service" to "publish [...] infringing, [...] unlawful topic, name, material or information" (among other things).
I would argue that this pushes the liability to the individual market creator.
Forecast Foundation's performance of this agreement is subject to existing laws and legal process
This means they won't hold up their end of the deal, in case laws prevent them from this. If legal issues make them censor, monitor or track people/questions, then they will do so.
For what it's worth, it looks like the Forecast Foundation is based in Estonia, so maybe nothing of what I said applies.
Also check out this question (looks US-centric to me).
But if it does apply, to me it looks like they'll be OK.