US Fifth Circuit Court of Appeals Backs PredictIt in Battle with CFTC
LISTEN TO THIS ARTICLE:PredictIt, a well-known betting platform, enables users to place bets on the outcomes of both financial and political events. Recently, it has been embroiled in a legal battle after the Commodity Futures Trading Commission (CFTC) demanded that it cease operations last summer.
Pushing back against this, PredictIt initiated a lawsuit that has not yet been resolved. However, recent filings from the US Fifth Circuit Court of Appeals suggest that PredictIt might eventually triumph over the CFTC in this legal battle.
In 2014, Victoria University of Wellington obtained a no-action letter (NAL) from the CFTC for PredictIt. This effectively exempted the platform from the need to register with the CFTC under the Commodity Exchange Act. Nevertheless, the CFTC withdrew the NAL last August, simultaneously directing PredictIt to halt its offerings.
Court of Appeals Backs PredictIt
Last Friday saw the US Fifth Circuit Court of Appeals siding with PredictIt. The court requested a district court to ensure that the CFTC refrains from taking additional action against PredictIt.
We now conclude that a preliminary injunction was warranted because the CFTC’s rescission of the no-action letter was likely arbitrary and capricious. So, we remand for the district court to enter a preliminary injunction while it considers Appellants’ challenge to the CFTC’s actions.
Following the US Fifth Circuit Court of Appeals’ verdict, the lawsuit is now moving to the US District Court for the Western District of Texas. Even though the case is still active, the verdict marks a crucial turning point in the legal clash between the CFTC and PredictIt.
This is a sweeping victory for prediction markets like PredictIt and those who find value in the insights they provide. One of the highest courts in the country agrees that in 2014 PredictIt was issued a license to operate, and the CFTC’s attempts to take that away were unjustified.
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