PredictIt and the Commodity Futures Trading Commission (CFTC) jointly filed a status update on their settlement talks last week, asking for an extension.
PredictIt’s lawsuit with the CFTC began after the agency pulled its no-action letter stating that it wouldn’t take action against PredictIt for offering its real-money event contracts, provided the exchange adhered to certain requirements. The CFTC pulled the letter and ordered PredictIt to shut down with no reasons provided. PredictIt then sued the CFTC under the Administrative Procedures Act, alleging that the regulator failed to properly justify pulling the no-action letter.
After a long winding legal process, which included an attempted change of jurisdiction, PredictIt and the CFTC are in “productive discussions” about how the case can be settled. Tuesday’s filing read in part:
“The parties are continuing to engage in settlement discussions that could lead to a consensual resolution of this matter. The parties therefore jointly request an additional two weeks for those discussions to continue and propose filing a status report on Tuesday, May 20, 2025, on the status of efforts to bring this matter to a close through a consensual resolution and thereby spare the further consumption of judicial resources.”
CFTC’s second about-face in court
PredictIt’s filing followed just one day after the D.C. Circuit Court of Appeals judge accepted an unopposed motion to dismiss a lawsuit between commercial prediction market platform Kalshi and the CFTC.
Kalshi had sued the CFTC for finding Kalshi’s election contracts were contrary to the public interest. The D.C. Circuit heard oral arguments in this case on Jan. 17, three days before the new administration brought a new approach to event contracts and prediction markets.
PredictIt’s case, Clarke v. CFTC, is being tried in the Western District of Texas. Though the court is different from that of the Kalshi case, the CFTC’s recent embrace of event contracts on elections is set to benefit PredictIt as well. The CFTC of the previous administration considered banning PredictIt’s contracts because they were too similar to “gaming,” an argument the CFTC has changed its tune on since the new administration took power.
Election contracts aren’t the end
The prediction market industry could see major lawsuits against both Kalshi and PredictIt end during the summer of 2025.
More relaxed approaches to approved prediction market topics likely won’t stop at elections. Kalshi and Crypto.com have pushed into sports contracts, riling state gambling regulators who view those contracts as gaming and outside of the authorized topics prediction markets may cover.
Unlike in the previous four years, prediction markets now have a strong ally in their federal regulator. Kalshi has won two preliminary injunctions in Nevada and New Jersey based on its regulator’s support for its sports contracts.
The CFTC accepting a settlement with PredictIt would cement the agency’s view of event contracts as useful hedging tools that may involve speculation, rather than as gambling products per se–even if many traders use some event contracts purely for betting purposes.
