PredictIt Defends Political Exchange After Fed Revokes Trading Privileges
Posted on: August 6, 2022, 03:40h.
Last update on: August 6, 2022, 06:12h.
The team behind PredictIt remains ‘committed to a future for political prediction markets,’ a spokesperson says Casino.org Friday. The statement came a day after federal regulators reversed a decision that allowed the online exchange to operate in the United States for nearly eight years.
Late Thursday afternoon, the American Commodity Futures Trading Commission (CFTC) notified the organizers of PredictIt by letter of its decision. The CFTC said the exchange was not operating within guidelines set by the federal regulator in a “no action” letter issued in October 2014. The letter, sent by the CFTC Division of the Director of Oversight of the market, Vincent McGonagle, said that PredictIt should close or liquidate all active futures markets by February 15.
PredictIt runs an exchange where traders can take a stance on future political events, such as elections and the passing of legislation. Traders buy shares for a potential result, and if their result is correct, they receive $1 for each share.
But since it is an exchange, traders can buy or sell trades until the event ends. This means that a trader could buy shares on one outcome, potentially sell them for a profit, and then look to buy shares on a competing outcome in hopes of profiting more as circumstances change around the event. .
Because betting on political events is not permitted in US states that regulate gambling, PredictIt has become the go-to site for those wishing to bet on elections, including the 2024 presidential election.
Over the past eight years, we’ve built a now thriving political business community through blood, sweat, and tears of good faith (and) we’ve always strived to be a good player in an industry beset by many bad and have worked with the CFTC from the beginning,” said spokeswoman Lindsey Singer Casino.org Friday.
Victoria University of Wellington, a New Zealand university, created the exchange, which it set up for research purposes. The CFTC set out nine rules when it gave its tacit approval for the exchange. These rules planned to operate as a small-scale non-profit exchange, operating solely for academic and research purposes, limiting each market opportunity to 5,000 traders, and capping each investor to an investment limit of $850 per opportunity. .
Neither the CFTC’s letter, nor a statement it issued late Thursday afternoon, indicated a specific reason for the non-compliance determination. Donna Faulk-White, associate director of the commission’s Office of Public Affairs, said Casino.org Friday that officials would not comment further beyond the letter or statement.
PredictIt representatives have had “constant communication” with the commission since its launch, but “what the CFTC released in its announcement is all we know,” Singer said.
“I can’t speak to the internal negotiations with the commission people or their motivations,” Singer added. “What I can tell you is that we are committed to a future for political prediction markets.”
Singer defended the exchange’s operations, saying it adheres to the $850 investment and 5,000 trader limits on opportunities through coding programmed into the technology platform.
Singer added that PredictIt also provides a valuable service to a number of key audiences beyond listed traders.
Many journalists, bloggers, podcasters, other content channels, academics, politicians, and countless American voters rely on this valuable chunk of data that will simply disappear without us,” The singer said Casino.org.
Bloomberg reported on Saturday, citing unnamed sources, that PredictIt’s ties to Aristotle International — a DC-based political data, technology and consulting firm — have raised concerns within the CFTC that the exchange may not work not as a non-profit business.
The CFTC letter said any new listings would not be covered by the “No-Action” letter, a decision that prompted PredictIt to stop adding new markets to the site.
Existing markets saw a rush in trading volumes in the hours following the CFTC announcement. But that has since bounced back closer to normal, according to Singer.
Since PredictIt is an exchange, anyone wanting to cash in now will need a buyer to acquire their shares.
“We really appreciate that the CFTC has not done this irreversibly and is allowing us to continue to run many markets until they naturally close, and we still hope to find a way to run the 2024 markets at their natural level. .conclusions”, said the singer.