Political prediction platform PredictIt procured regulatory approval from the Commodity Futures Trading Commission (CFTC), paving the path for its future as a licensed hub for contract sales and purchases.
Key Takeaways
- PredictIt won a lawsuit against the CFTC in July.
- The platform previously only offered political markets.
- Prediction platforms are in vogue and have merged into the sports betting industry.
Regulatory approval had been a long time coming for PredictIt. Applications from its operating company, Aristotle, had been under review since 2021, according to Bloomberg.
The decision comes during an explosion in the prediction industry. The CFTC has granted approval to numerous platforms, while others have secured partnership deals with a variety of entities, including sportsbooks.
“We thank the CFTC staff and Acting Chair Pham for their diligence in reviewing and approving our applications,” said Aristotle CEO John Aristotle Phillips. “With more than a decade of experience operating PredictIt, we’re excited to bring that knowledge and community to a fully regulated marketplace.”
PredictIt had operated under guidelines of a no-action letter - a note that suggests a government entity won’t encourage enforcement against a business so long as it abides by a set of rules or standards - for more than a decade.
However, that changed when the CFTC removed its recommendation in 2022. The regulator accused PredictIt of failing to comply with the expectations of the letter, such as restricting trading to low-dollar amounts for academic reasons.
PredictIt won its lawsuit against the CFTC in July, which allowed it to increase its maximum trade size and volume in political betting markets and opened the door to its expansion in the world of prediction-making.
What’s next for PredictIt?
With approval now obtained, the new exchange plans to open in October, Aristotle said in a statement obtained by Bloomberg. PredictIt is expected to have more markets for its traders than it previously offered.
“Prediction markets help people understand the future, and this approval allows us to deliver the most robust and transparent version of that vision yet,” said Phillips.
With a license in hand, PredictIt can now join a market led by mainstay prediction outlets, such as Kalshi, Crypto.com, and Polymarket.
The CFTC’s approval includes several terms of compliance. Aristotle is required to only offer approved markets, protect nonpublic information, minimize conflicts of interest, and remain compliant with the CFTC’s regulations, reporting, and recordkeeping.
Prediction platforms growing quickly
Prediction platforms are rapidly growing in popularity as Americans look to explore every avenue of the gambling industry.
Such platforms maintain they are not the same as sportsbooks, but many have begun to offer sports contracts, which allow consumers to buy and sell outcomes associated with sporting events.
The noise reached the ears of FanDuel and Underdog, who signed partnerships with CFTC-licensed prediction entities CME Group and Cypto.com, respectively.
Citizens gaming analyst Jordan Bender predicted in April that platforms like these would generate $555 million, about 3.5% of the total generated by legal sportsbooks in 2024.
