PredictIt will end political futures trading if the ordinance bid fails

Published on: January 20, 2023, 04:13 am.

Last updated: 20 January 2023, 04:13.

If a federal appeals court doesn’t grant PredictIt an order to keep its political futures exchange open next month, the operator will look to reinvent itself. Casino.org learned on friday.

PredictIt
A screenshot of the PredictIt home page on Friday. A representative of the political futures exchange said Friday that the market would liquidate if PredictIt does not receive an order to keep trading active after a Feb. 15 deadline set by the CFTC. (Image: Predictt.org)

The US Fifth Circuit Court of Appeals has scheduled a hearing for February 8 in New Orleans to hear PredictIt’s request to keep its exchange active after the February 15 deadline set by the Commodity Futures Trading Commission (CFTC) in its letter last year , which reversed the no-action status PredictIt’s founders received in 2014.

PredictIt, along with traders who use the exchange and professors who rely on the exchange’s data for research, filed the lawsuit in September to stop the CFTC from enforcing the takedown letter it sent on Aug. 4. In that notice, the federal regulator said PredictIt violated the terms of the no-action letter. The commission added that existing markets, such as those for the 2024 presidential election, should be liquidated by February 15.

If the court denies PredictIt’s request for an injunction, we will comply with the CFTC’s requirement to liquidate all remaining markets on or before February 15th,” PredictIt director of public relations Lindsey Singer told Casino.org in an email Friday . “After February 15th, merchants will be able to continue to withdraw any cash they have in their PredictIt account in accordance with our terms and conditions.”

The original lawsuit was filed in the U.S. District Court for the Western District of Texas. The plaintiffs took the injunction motion to the appellate level after U.S. District Judge Lee Yeakel failed to rule on the injunction, which was filed in September.

New life for PredictIt?

PredictIt also sent an update to its users on Friday about the lawsuit and another deal that’s in the works.

Exchange officials are also working to establish a designated contract market (DCM), which would be called the PredictIt Exchange. The CFTC defines them as exchanges that can list futures “based on certain types of commodities” that could be bought and sold by any trader, including individual investors at any level.

“Political prediction markets are in our blood, and we’re working on other ways we can offer new election markets for the current political season,” PredictIt said in its note to users.

Kalshi, which was denied a request to operate a congressional election exchange by the CFTC, is an example of a DCM. It offers futures contracts in several categories, including financial markets, climate and entertainment. Kalshi also offers some non-election political markets, such as Congress’s action on the debt ceiling and whether the UDS government will shut down by October 2.

If approved, PredictIt Exchange would operate under DCM regulations, which could include political events such as judicial nominations and Supreme Court decisions,” Singer said.

She added that Aristotle International, the Washington, DC-based company that serves as PredictIt’s market service provider, has applied for DCM status and “that application is substantially complete.”

DCM application submitted in October 2021

A check of the CFTC website shows that an Aristotle Exchange application is pending. It was submitted in October 2021. The address on that application matches that for Aristotle International.

PredictIt was founded by New Zealand’s Victoria University of Wellington for research purposes, and the school operates the exchange through Aristotle. Court documents in the lawsuit against the CFTC also describe PredictIt as a subsidiary of Aristotle.

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