CFTC revokes permission for betting platform PredictIt

What’s new? On August 4, the US Commodity Futures Trading Commission (CFTC) issued an injunction to shut down Predictlt, a popular political prediction betting platform operated by Victoria University of Wellington in New Zealand. The regulator accused the platform of failing to meet the requirements listed in the no-action letter. PredictIt must cease operations in the United States by February 15, 2023.

Bloomberg’s material

What is known about the ban? In its statement, the CFTC did not specify what requirements PredictIt failed to meet. For its part, the platform claims that all open markets are within the terms of the letter. Representatives of the platform assured that the security of traders’ funds will not be affected, while PredictIt suspends the addition of new markets. The platform will continue to accept new deposits and signups and accommodate withdrawal requests.

PredictIt’s statement

The PredictIt platform was launched in October 2014. It is backed by Aristotle International, Inc., a US data processing and verification service provider. PredictIt calls itself “the Stock Market for Politics.” Users buy and sell shares that estimate the outcome of an event, earning if predictions are met. Some argue that prediction markets are a means of determining public opinion more accurately because users risk their funds.

Regulators consider the activities of such platforms to be similar to gambling or the unregistered sale of futures contracts. Many prediction betting platforms, including PredictIt, use political markets as a polling tool to obtain election data, which is banned in the United States.

In July, the CFTC created the Office of Technology Innovation (OTI). Starting at the end of July, Commission employees can undertake an internship at OTI to gain experience in the field of cryptocurrencies.

In August, members of the US Senate Debbie Stabenow and John Boozman introduced a bill that would give the CFTC authority to oversee the cryptocurrency market. If approved, digital assets would be regulated as commodities rather than securities, and cryptocurrency companies would be required to register with the CFTC.