PredictIt Lifts Limit on Political Trades in New CFTC Agreement

Prediction market operator boosts contract limit to $3,500

Scraps limit on number of traders per contract

PredictIt announced Tuesday it reached a new agreement with the Commodities Futures Trading Commission (CFTC), paving the way for the company to increase liquidity and offer higher political contract limits.

A screen capture of PredictIt’s home page on July 24, 2023. The company said it’s lifting its contract limit. (Image: PredictIt)

PredictIt, which rose to prominence by offering derivatives on elections, said that following the new accord with the CFTC, the previous contract limit of $850 per client has been increased to $3,500 — the federal individual campaign contribution limit.

The Washington, DC-based company added its previous limit of 5,000 traders per event contract has been lifted. Now, there is no cap, which could result in increased liquidity across various politically based event contracts.

The news comes after PredictIt was on a regulatory hiatus.

With strengthened compliance protocols and an unwavering commitment to excellence, PredictIt returns from its regulatory pause not just as a leader — but as the benchmark for what real-money prediction markets can and should be,” according to a post on the company’s web site.

While PredictIt has encountered regulatory headwinds, it’s largely steered clear of the sports betting maelstrom surrounding rivals such as Kalshi and Polymarket. Kalshi, in particular, is in the crosshairs of multiple attorneys general because it’s offering sports event contracts while not holding state gaming licenses. The company believes it can do so because it’s federally regulated.

PredictIt, CFTC Recently Settled Litigation

News of PredictIt’s expanded limits arrives about three weeks after the company settled long-running litigation with the CFTC. In 2014, the commission granted PredictIt approval to offer political derivatives without fear of enforcement action.

Eight years later, that approval was rescinded and the CFTC gave the prediction markets operator until February 2023 to liquidate outstanding contracts. PredictIt challenged that decision in court, touching off a lengthy legal tussle.

In what could be the latest signal of a more favorable regulatory regime for prediction market firms, the CFTC/PredictIt case has been put to rest, opening the door for the aforementioned contract limit increase and, potentially, enhanced liquidity.

“The parties have reached an agreement in principle that would resolve this litigation. In the coming days, the parties will be making filings asking the Court to enter orders implementing that resolution. Until such time, the parties respectfully request that the Court continue to stay the pending motions,” according to a June filing with the US District Court for the Western District of Texas.

PredictIt Targeting More Markets

In addition to unveiling higher contract limits, PredictIt teased an expanded slate of futures contracts for traders to evaluate.

We’re dramatically expanding the number and diversity of markets available — giving traders even more ways to engage with breaking news, policy shifts, and electoral dynamics in real time,” according to the post.

That implies PredictIt has learned from Kalshi’s sports betting-related issues and will remain focused on political derivatives. Of the 25 markets currently available on PredictIt, all are related to politics, with the most heavily traded pertaining to the New York City mayoral contest.

Conclusion

PredictIt’s new agreement with the CFTC marks a significant step forward for the prediction market operator. By increasing its contract limit and lifting its cap on traders per event contract, PredictIt is poised to increase liquidity across various politically based event contracts. With its commitment to excellence and compliance protocols, PredictIt returns from its regulatory pause as a leader in the industry. As the company continues to expand its slate of futures contracts, it remains focused on political derivatives and will likely benefit from its new agreement with the CFTC.

Key Points

• PredictIt has reached a new agreement with the CFTC, paving the way for increased liquidity and higher political contract limits.
• The company’s previous contract limit of $850 per client has been increased to $3,500 — the federal individual campaign contribution limit.
• PredictIt’s previous limit of 5,000 traders per event contract has been lifted, with no cap now in place.
• The new agreement follows a long-running litigation with the CFTC, which was settled recently.
• PredictIt is targeting more markets and expanding its slate of futures contracts for traders to evaluate.

What’s Next for PredictIt?

The news from PredictIt comes as the company continues to navigate the regulatory landscape. With its new agreement in place, PredictIt is well-positioned to capitalize on increased liquidity and expanded markets. As the industry continues to evolve, it will be interesting to see how PredictIt’s strategy plays out and whether other prediction market firms follow suit.

Why You Should Care

Prediction markets offer a unique way for individuals to engage with politics and make informed predictions about future events. With increased liquidity and expanded markets, PredictIt is poised to provide traders with more ways to participate in these markets. Whether you’re a seasoned trader or just starting out, the expansion of prediction markets like PredictIt’s is something worth paying attention to.

Additional Resources

For more information on PredictIt and its expanded slate of futures contracts, visit their website at [https://www.predictit.org/](https://www.predictit.org/).