PredictIt
PredictIt logo
Type of site
Prediction market
OwnerVictoria University of Wellington
URLwww.predictit.org
CommercialNo
RegistrationRequired for trading
Launched3 November 2014 (2014-11-03)
Current statusPartially Operational / In Legal Battle with CFTC. Outcome will determine whether operations fully cease or fully resume.

PredictIt is a New Zealand-based online prediction market that offers exchanges on political and financial events.[1] PredictIt is owned and operated by Victoria University of Wellington[2] with support from Aristotle, Inc.[3] The company's office is located in Washington, D.C.[4]

The market was initially launched on 3 November 2014.[1][4]

History

PredictIt was first launched on 3 November 2014.[1] By March 2016, the website had approximately 29,000 active traders.[5] The nonprofit educational project of the Victoria University of Wellington, New Zealand, "had to work around federal laws that prohibit online gambling and govern commodity futures trading."[6] During the 2016 United States elections, PredictIt, along with other prediction market websites, received attention from various media outlets.[5][7][8]

Trading format

PredictIt uses a continuous double auction to sell shares for each event in its markets, meaning that for every person who predicts that an event will take place, there must be another person who predicts that it will not. The site groups related predictions into a market.[9] Operating expenses are covered by charging a fee of 10% on earnings in excess of the original investment and by charging an additional 5% withdrawal fee.[10] PredictIt has many different categories of markets including questions about the Biden administration,[11] U.S. elections,[12] Congress,[13] state/local elections,[14] and world.[15] Questions vary from asking which political party will win certain elections, which candidate will win, what the margin of victory for the winner will be, and even what the results of future polls on RealClearPolitics and FiveThirtyEight will be.[16]

Data-sharing program

PredictIt offers a data sharing program for members of the academic community. PredictIt has over 160 data partners, including researchers affiliated with Duke University, Harvard University, the Massachusetts Institute of Technology, the Oklahoma State University, the University of Michigan, the University of Pennsylvania, the University of Virginia, and Yale University.[17]

Regulation

Victoria University of Wellington secured a no-action letter from the Commodity Futures Trading Commission (CFTC),[18] eliminating the risk of prosecution for illegal online gambling.[19] In order to secure the no-action letter, each question is limited to 5,000 traders, and there is an $850 cap on individual investments per question.[2] These restrictions are modeled after the Iowa Electronic Markets, which previously secured a no-action letter from the Commodity Futures Trading Commission.[19] However, there are differences in the restrictions between the two markets.[18]

2022 CFTC Action letter

On August 4, 2022, the CFTC announced that Victoria University has not operated PredictIt in compliance with the terms of the no-action letter and as a result the no-action letter had been withdrawn. The CFTC stated that all related and remaining listed contracts and positions on PredictIt should be closed out and/or liquidated no later than 11:59 p.m. (EDT) on February 15, 2023.[20] In September 2022, PredictIt and Aristotle International filed suit against the CFTC in the U.S. District Court for the Western District of Texas to block the action.[21] On January 26, 2023, the Fifth Circuit granted a temporary injunction allowing PredictIt to continue operating while the court considered further term relief for the organization.[22]

Better Business Bureau Rating

PredictIt has an F rating with the Better Business Bureau since 2019. Reasons include: Refusing to pay their customers [23]

See also

References

  1. 1 2 3 "New prediction market tabs Jeb Bush as frontrunner for 2016 GOP nomination". SaintPetersBlog. 3 November 2014. Retrieved 25 January 2015.
  2. 1 2 "Terms And Conditions". PredictIt. Retrieved 25 January 2015.
  3. ↑ "What Is PredictIt?". PredictIt. Retrieved 25 January 2015.
  4. 1 2 Patrick O'Connor (21 August 2015). "Online Exchange Shows Jeb Bush as the GOP's 2016 Favorite". The Wall Street Journal. Retrieved 24 August 2015.
  5. 1 2 Jessica Contrera (28 March 2016). "Here's how to legally gamble on the 2016 race". The Wall Street Journal. Retrieved 17 November 2016.
  6. ↑ Bachman, Katy (31 October 2014). "Meet the 'stock market' for politics". Politico.com. Retrieved 15 November 2017.
  7. ↑ Andrew McGill (11 May 2016). "The People Who (Still) Bet Trump Won't Win the Nomination". The Atlantic. Retrieved 17 November 2016.
  8. ↑ Rory O'Connor (18 February 2016). "Something better than polls for political predictions? You bet!". PBS NewsHour. PBS. Retrieved 17 November 2016.
  9. ↑ "How It Works". PredictIt. Retrieved 25 January 2015.
  10. ↑ "PredictIt". www.predictit.org.
  11. ↑ "PredictIt".
  12. ↑ "PredictIt".
  13. ↑ "PredictIt".
  14. ↑ "PredictIt".
  15. ↑ "PredictIt".
  16. ↑ "PredictIt".
  17. ↑ "Research Opportunities". PredictIt.org. Retrieved 2 October 2019.
  18. 1 2 "CFTC Staff Provides No-Action Relief for Victoria University of Wellington, New Zealand, to Operate a Not-For-Profit Market for Event Contracts and to Offer Event Contracts to U.S. Persons". www.cftc.gov. U.S. Commodity Futures Trading Commission. 29 October 2014. Archived from the original on 22 April 2021. Retrieved 1 June 2021.
  19. 1 2 Katy Bachman (31 October 2014). "Meet the 'stock market' for politics". Politico. Retrieved 25 January 2015.
  20. ↑ "CFTC Staff Withdraws No-Action Letter to Victoria University of Wellington, New Zealand Regarding a Not-For-Profit Market for Certain Event Contracts".
  21. ↑ Travis, Brandi (6 October 2022). "Additional Plaintiffs Join 'Predictit' Lawsuit Against CFTC". Global Newswire. Retrieved 1 November 2022.
  22. ↑ Aristotle (27 January 2023). "Fifth Circuit Grants Injunction Allowing PredictIt Market to Continue Operating". GlobeNewswire News Room. Retrieved 27 January 2023.
  23. ↑ "Better Business Bureau".
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