In what may be the latest sign that the Trump-era Commodity Futures Exchange Commission (CFTC) is prepared to take a more lax stance on prediction markets offering event contracts, PredictIt announced that the federal regulator has authorized it to expand its offerings.
In 2022, PredictIt was ordered to close down by the Biden-era CFTC, but it later secured a temporary injunction that allowed it to stay online.
On Tuesday, the company teased on social media site X that it will launch “major updates” including a removal of the limit on the number of traders it can serve. It also said it will be “dramatically expanding the number and diversity” of the markets it offers. It currently offers 25 markets, all politics-related.
It thanked acting CFTC Chair Caroline Pham for allowing the revamp.
On Wednesday, PredictIt released an official press release detailing the changes and hailing what it described as a legal “victory.”
The updated agreement removes the 5,000-trader limit on contracts, enabling an unlimited number of participants to join. PredictIt quoted the CFTC as stating that the removal of the cap “is intended to foster broader public participation and enhance the utility of prediction markets as tools for academic research and public insight.”
The cap on bets made through the platform will also roughly quadruple, from $850 to $3,500, which is the federal individual campaign contribution limit.
In addition, the platform will now be governed by a non-profit entity, the Prediction Market Research Consortium, advised by academic experts from several universities. PredictIt said the new governance structure “recognizes the significant research contributions made by PredictIt and other prediction markets, further strengthening their value to the academic community.”
PredictIt also says that it is “dramatically expanding the number and diversity of markets available.” PredictIt currently offers only 25 markets, mostly covering election outcomes, but it did not reveal what the new markets may cover.
PredictIt positions expansion as legal win
In its statement, PredictIt suggested that the permission of its expansion proves correct a U.S. court’s verdict that former Chair Rostin Behnam was wrong to seek to shut down the prediction market.
Thousands of PredictIt’s 400,000-plus users sent letters of support to their representatives and regulators during PredictIt’s legal battle.
“This victory includes the legal admission, as determined by the Fifth Circuit Court of Appeals, that the prior chairman of the commission acted in an ‘arbitrary and capricious’ manner in seeking to shut down PredictIt — and enables PredictIt to continue operating indefinitely under a transparent and fair regulatory framework,” said the company.
“We are deeply grateful to Acting Chair Caroline Pham and the commission staff for recognizing the importance of PredictIt,” said the firm’s co-founder John Aristotle Phillips. “Their diligence ensures the orderly expansion of prediction markets, allowing more Americans to participate in informed forecasting.”
CFTC, DoJ end investigations into Polymarket
PredictIt’s social media post came on the same day that the CEO of fellow prediction market Polymarket confirmed a report that the CFTC and the Department of Justice (DOJ) have each ended their respective investigations into cryptocurrency-focused exchange.
The two investigations that were ramped up by the Biden administration have been shut down by the Trump administration.
Officially, Polymarket does not take action from U.S.-based consumers, a condition of a settlement with the CFTC in January 2022 that stemmed from it allegedly failing to register with the federal derivatives regulator.
The change of course comes as Kalshi board member and former Crypto.com advisor Brian Quintenz is earmarked as Trump’s nominee to be the next leader of the CFTC.
