Political prediction market platform, PredictIt, expands political trade allowances following a new agreement with the Commodity Futures Trading Commission (CFTC).
PredictIt, a Washington, D.C.-based company that rose to prominence by offering derivatives on elections, has received approval from the Commodity Futures Trading Commission (CFTC) to significantly expand its political prediction market. This expansion marks a major shift in U.S. political derivatives trading and prediction markets.
Following a lengthy legal battle with the CFTC, PredictIt has been given the green light to eliminate the 5,000-trader limit on any single contract, allowing an unlimited number of participants to trade on PredictIt events. This change is intended to foster broader public participation and enhance the markets' usefulness for academic research and public insight.
The maximum wager per contract has been increased from $850 to $3,500, aligning the cap with the federal individual political campaign contribution limit and potentially adjustable with election cycles.
Governance of PredictIt will now be under a non-profit entity, the Prediction Market Research Consortium, advised by academics, emphasizing its research focus and contribution to the academic community.
The expansion plans also include a dramatic increase in the number and diversity of contracts offered, beyond the current 25 mostly election-related markets. Exact new market areas have not yet been disclosed.
These updates follow a legal battle with the CFTC, which challenged PredictIt's operation under Biden-era policies after a Trump-era no-action letter protected it. The recent agreement is seen as a "legal victory" enabling PredictIt to grow its market and influence in political derivatives trading.
With these changes, PredictIt is likely to increase liquidity, market depth, and the relevance of prediction markets in political risk trading, potentially attracting more traders and academic users due to the removal of restrictive caps and increased betting limits. However, the legal and regulatory environment remains complex, and the long-term stability of these markets depends on ongoing regulatory developments.
In contrast to PredictIt, rivals like Kalshi and Polymarket have faced sports betting regulatory issues. Currently, Kalshi is under scrutiny from multiple attorneys general due to offering sports event contracts without holding state gaming licenses.
PredictIt's website states that following the agreement, the company is committed to excellence and strengthened compliance protocols. All current markets on PredictIt are related to politics, with the most heavily traded market being the New York City mayoral contest.
- The Commodity Futures Trading Commission (CFTC) has approved PredictIt's request to remove the 5,000-trader limit on any single contract, opening up participation to an unlimited number of traders.
- The maximum wager per contract on PredictIt has been increased from $850 to $3,500, aligning with the federal individual political campaign contribution limit.
- PredictIt will now be governed by a non-profit entity, the Prediction Market Research Consortium, which is advised by academics, emphasizing PredictIt's research focus and contribution to the academic community.
- PredictIt plans to significantly increase the number and diversity of markets offered, beyond the current mostly election-related markets, although exact new market areas have not yet been disclosed.