PredictIt users are not taking the forced cessation of their political prediction market lying down, as some of the site’s traders and academic users and its market technology provider Aristotle International filed a federal lawsuit Friday against the Commodity Futures Trading Commission (CFTC).
The suit, as detailed in a letter to users from Aristotle International, seeks to block the CFTC from shutting down the site.
This lawsuit is coming on the heels of news that the CFTC is expected to rule by Oct. 28 as to whether to allow Kalshi to operate political futures markets.
Last month, the CFTC withdrew its “no-action” letter for PredictIt, effectively shutting down — as of Feb. 15, 2023 — the Victoria University of Wellington in New Zealand site for American users.
“…the market still yielded what Mr. Yass calls ‘tremendous information’ on political outcomes…When price information is ‘so valuable,’ he adds, the government should be encouraging it rather than shutting it down.”https://t.co/Bv1OH1TsKt pic.twitter.com/K2QFeCzqm7
— PI (@PredictIt) September 12, 2022
The site has been legally operating since 2014 under the terms of the no-action letter, allowing users to buy contracts on political events. Contracts were limited to $850 and no more than 5,000 traders could engage in any single market.
For example, on PredictIt right now, traders could wager on who will get the 2024 GOP presidential nomination. Florida Gov. Ron DeSantis is the favorite at 36 cents — meaning, you can “buy” DeSantis futures for 36 cents, and if he were to win the nomination, you would get $1; if he were to lose, you’d get bupkis; and between now and then, you could trade in and out of the market. (For what it’s worth: Former President Donald Trump is at 31 cents, former South Carolina Gov. Nikki Haley is at 6 cents, former Vice President Mike Pence is at a nickel, and there are 13 others listed, including Donald Trump Jr. at 2 cents.)
Let them finish
In addition to asking the U.S. Federal District Court for the Western District of Texas to nix the CFTC’s plans to shutter PredictIt, the suit is also asking the court to, at minimum, allow contracts that last longer than the Feb. 15 date to “resolve in an orderly manner.”
Damning assertions by @PredictIt in lawsuit of the @CFTC. PredictIt says ZERO warning or rationale was given for the No Action Letter withdrawal, a clear violation of the Administrative Procedures Act pic.twitter.com/9Cv9rzjTPz
— DrCruse (@predoctit) September 10, 2022
“The CFTC action taken on Aug. 4, 2022, threatens to harm not only the value of modest investments of more than 80,000 PredictIt traders, but the quality of the anonymized data used by more than 200 academic researchers and university educators,” Aristotle’s letter continues. “Aristotle International, the contract service provider for the PredictIt Market, will do everything in its power to ensure that no trader suffers harm from the CFTC staff action.”