PredictIt can finally close the book on its long-winding court case against the Commodity Futures Trading Commission (CFTC). District Court Judge David Ezra officially granted the political prediction exchange’s proposed motion for judgment in favor of the plaintiffs on July 21.
The proposed settlement agreement between PredictIt and the CFTC included the following terms:
(1) granting the CFTC’s motion for judgment on the pleadings in favor of [the] Plaintiffs
(2) vacating and setting aside the two CFTC letters seeking to close the PredictIt Market challenged by Plaintiffs
(3) declaring the justifications stated in…those letters for seeking to close the Market arbitrary and capricious and otherwise legally deficient
(4) enjoining the CFTC from seeking to close the PredictIt Market…based on events or facts or features of the PredictIt Market known to the Commission…
(5) denying Plaintiffs’ requests for additional relief, including for litigation costs and attorneys’ fees
(6) denying as moot Plaintiffs’ Motion for Leave to File a Third Amended Complaint
Thanks to terms of its new agreement with the CFTC, PredictIt has already eliminated its trader limits and raised its position limits from $850 to $3,500. The political prediction market platform has also added new markets on confirmation votes, foreign election winners, and whether different candidates will launch political campaigns.
PredictIt gets green light to expand for first time in 3 years
The court case began when the CFTC revoked PredictIt’s no-action letter back in 2022 under the Biden administration. PredictIt had operated under that no-action letter since 2014, when it received permission to offer political and election contracts as an academic project run by Victoria University.
After the CFTC pulled the no-action letter, PredictIt argued that the commission did not sufficiently defend its decision to revoke it and sued the CFTC under the Administrative Procedures Act (APA).
After a long hiatus, PredictIt is back to adding new markets in an industry with fewer limits on expansion, thanks in part to expansive legal victories for commercial exchanges Kalshi and Polymarket.
New regulators, new rules
Even without a permanent CFTC chair, the Trump administration has seen a reversal in attitude toward controversial event contracts.
CFTC-regulated prediction market platform Kalshi has led the way in gaining legal approval for election contracts in commercial settings rather than being limited to academic settings. Kalshi is also taking the lead in litigation against state gaming regulators who argue that event contracts on sports are too similar to gaming to not be regulated by the states. Kalshi is still waiting for a ruling in the District Court of Maryland and the Third Circuit Court of Appeals from its New Jersey victory.
When she took over the CFTC as interim Chair, Caroline Pham announced that the CFTC would “refocus on fraud and helping victims” and to “stop regulation by enforcement.” She also raised concerns about the number of dismissed cases and summary judgments the CFTC faced in court, evidence that the CFTC improperly applied its own rules and regulations.
Under Pham, the CFTC has dropped its appeal on Kalshi’s election case and has allowed prediction market platforms and brokerages to list sports contracts for trading. She has turned her concerns about excessive CFTC enforcement—and being on the losing side of cases—into early policy.
So, it’s unsurprising that PredictIt was able to reach a deal, too.
Golden age of prediction markets
With PredictIt in the clear and Polymarket also cleared to return to the United States market, the prediction market industry is set to grow exponentially. The events that are considered fair game for regulated platforms is also primed to expand.
However, as prediction markets grow, the cracks in the industry will draw critics to issues that subsequent administrations may have to address. Issues like know-your-customer rules in political markets or whether resolving markets through votes with the UMA token are going to be stress-tested during this “Golden age” of prediction markets.
How prediction markets perform, and how they respond, will help determine how long that golden age might last.
