Election betting platform PredictIt must shut down for U.S. users in February, according to an order from the Commodity Futures Trading Commission.
The CFTC said the operators haven’t complied with the agency’s requirements for running the popular site.
Eight years ago, the CFTC issued a no-action letter – a document that says the regulator wouldn’t make trouble about something that might not otherwise meet existing rules – to Victoria University of Wellington, New Zealand, the site’s operator. PredictIt was able to take wagers from its “traders” on such open questions as the future Republican nominee for the 2024 presidential election, whether the U.S. Senate will pass a reconciliation bill by Sept. 2 or whether Rep. Alexandria Ocasio-Cortez (D-N.Y.) will seek the White House.
This week, the CFTC stated that the university “has not operated its market in compliance with the terms of the letter.” PredictIt was told to shutter in the U.S. by Feb. 15.
PredictIt told its U.S. users that “the security of trader funds will not be affected by this action,” and that it’ll keep going until next year. It won’t start new markets, according to a statement on PredictIt.org, and it hasn’t yet determined how it’ll resolve predictions that have an end date after February, which would include the U.S. presidential election.
The crypto industry – including Augur, PrediQt, Polymarket and FTX – has also made forays into trying to build decentralized prediction markets, with varying levels of success. Earlier this year, Polymarket was fined $1.4 million by the CFTC and ordered to close its U.S. market, though it continued with an information market for non-U.S. residents.
The university behind PredictIt was given its no-action permission on the basis that it run “a small-scale, not-for-profit, online market for event contracts in the U.S. for educational purposes.” As long as it met CFTC expectations, it didn’t have to register for oversight from the agency. The regulator didn’t specify in its statement how the no-action was violated.