One of the most popular platforms to bet on election outcomes in the United States will shut down in early 2023. The Commodity Futures Trading Commission (CFTC) revoked the operating permission it issued to PredictIt in 2014, stating that the platform had violated the terms of the agreement.
Launched in November 2014, PredictIt allows its users to make bets on outcomes of elections and major financial events. It made its name with the former, with millions able to bet on who gets elected to U.S. Congress or even for the Presidency.
Currently, users can bet on whether Donald Trump will regain the seat he lost to Joe Biden in two years’ time, whether New York’s outspoken Rep. (D-NY) Alexandria Ocasio-Cortez will vie for presidency in 2024, whether VP Kamala Harris will be the 47th U.S. president and hundreds of other available markets.
PredictIt was launched and owned by Victoria University of Wellington, New Zealand. Back in 2014, the CFTC granted the platform permission via Letter 14-130 to operate in the U.S., but only on the condition that it would remain not-for-profit, would be operated for academic purposes, be overseen by the University, and be limited to an $850 wager per participant in any contract, among other conditions.
The regulator now claims that PredictIt hasn’t abided by the conditions.
“The University has not operated its market in compliance with the terms of Letter 14-130.4. As a result, Letter 14-130 is hereby withdrawn and, as such, is not available for the listing or operation of any new or related contracts,” the watchdog stated in a press release.
CFTC didn’t specify what provisions PredictIt violated. However, it ordered the platform to shut down its services by February 15, 2023.
In its response, the platform refuted the CFTC’s claims, maintaining that its markets “are not only within the terms of the no-action letter but are also consistent with commission interpretations conveyed to us over the past eight years.”
Moreover, it pledged to continue operating all its markets until February 15. However, it’s unclear what will happen to the open markets whose due dates are beyond the shutdown date.
One of the more contentious issues with the platform’s operations is its tie-up with Aristotle Inc., a tech company that specializes in mining voter data for political campaigns. Sources within the CFTC told Bloomberg that this was one of its main concerns.
But according to the university, the regulator is flipping the script on the 2014 agreement. The university maintains that it has been open throughout its association with Aristotle, saying that PredictIt “remains a project of the university, operated by Aristotle. There has been no sale by the university to Aristotle.”
Aristotle’s spokesperson refuted any claims of foul play, telling Bloomberg, “The CFTC has known for years about the extent to which Aristotle was involved with PredictIt day to day, as this was disclosed to them by us many years ago.”
As CoinGeek reported earlier this year, CFTC cracked down on Polymarket, a blockchain-based platform that also lets its users place bets on election outcomes. Polymarket had been very popular, with reports last year revealing that it was seeking to raise funds at a $1 billion valuation. It all ended abruptly with the CFTC action, which also included a $1.4 million fine.
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