PredictIt, an 11-year-old prediction market that specializes in political offerings and was once legal in the United States because of an affiliation with a New Zealand university, last week became registered as a designated contract market (DCM) with the Commodity Futures Trading Commission (CFTC).
On Monday, in a letter to customers, John Aristotle Phillips, the CEO of PredictIt and Aristotle, the company under which PredictIt is registered with the CFTC, said new products were expected to launch in October.
Key among the changes is an expansion beyond political markets, but Phillips didn’t elaborate as to whether that would include the type of sports events contracts being offered by Kalshi and competing exchanges that are viewed by some as an existential threat to the legal sports betting market in the United States.
Said Phillips in a press release:
“We thank the CFTC staff and Acting Chair [Caroline] Pham for their diligence in reviewing and approving our applications. With more than a decade of experience operating PredictIt, we’re excited to bring that knowledge and community to a fully regulated marketplace.”
From the PredictIt email:
Veteran prediction market vs. the disruptors
PredictIt brings legacy to the new U.S. prediction market landscape, but newcomers, particularly Kalshi, have in the past year blazed ahead in terms of user base and piercing a controversial new market.
The Kalshi exchange is currently fighting cease-and-desist orders in Maryland, New Jersey, and Nevada, claiming that the CFTC — which currently has just one member — has federal oversight over registered exchanges, not state regulators. In a July bulletin, PredictIt said it planned to “dramatically” expand “the number and diversity of markets available.”
Polymarket, the world’s largest prediction market, is approved to launch legally in the U.S., and other exchanges like Robinhood are dabbling in sports event contracts.
PredictIt, which in an email to customers called itself the “Cadillac of prediction markets,” operated in the U.S. under an “no-action” letter and in conjunction with Victoria University through 2022, ostensibly operating as a research tool. The CFTC revoked the letter in August 2022, prompting PredictIt litigation, but matter the was resolved this July.
As a result, PredictIt was able to increase its total pool of traders from 5,000 to an unlimited number. Kalshi has an estimated two million users. Robinhood reported around 14.9 million active users in December.
Also, PredictIt traders’ position limit on any given market was allowed to increase from $850 to $3,500. PredictIt still offers its data to academic institutions as a member of the Prediction Market Research Consortium, but takes a 10% fee on all profit sales.
