Victoria University of Wellington, the New Zealand institution that created PredictIt more than eight years ago, has been granted additional time to address US regulators’ attempts to shut down the online political futures exchange.
The Commodity Futures Trading Commission building in Washington, DC. Victoria University in Wellington notified Casino.org late Monday that it has been given more time to answer a March 2 letter outlining allegations that PredictIt contravened the No-Action letter the New Zealand school had obtained in 2014, permitting it to initiate the online political futures exchange. (Image: CFTC)
Monday was supposed to be the due date for the school to react to a March 2 letter it received from the Commodity Futures Trading Commission (CFTC). In that letter, the federal agency announced that it had withdrawn an August 2022 notification in which the CFTC declared it was revoking the 2014 no-action letter that had enabled PredictIt to function in limited capacity.
In the March 2 letter, which the CFTC included a redacted version of in a filing with the Fifth Circuit Court of Appeals the following day, commission staff outlined specific violations it alleges PredictIt committed that breached the conditions of the no-action letter. Rather than issuing a deadline for ceasing trading, as it did in the August letter, the commission initially set a Monday deadline in the letter for Victoria University to respond.
“Victoria University of Wellington has not yet responded to the letter from the CFTC,” the university told Casino.org in a statement Monday night ET (Tuesday afternoon in New Zealand). “The CFTC has extended the date by which the University is to respond to April 5, 2023.”
Earlier on Monday, a commission spokesperson told Casino.org the agency could not comment beyond what it has said in court filings and other public documents.
CFTC Court Filing Scheduled This Week
The CFTC wants the Fifth Circuit to lift an injunction it placed on the agency earlier this year at the request of PredictIt and other plaintiffs in a federal lawsuit filed to keep the exchange alive. By nullifying the original letter, the agency now states that the injunction is moot, and the appeal should be dismissed.
The exchange was joined by Aristotle International, a Washington, DC-based political technology firm, as well as numerous traders and researchers who use the exchange in the lawsuit that was originally filed last September in a US District Court in Texas.
Initially, Monday’s deadline was one of two crucial dates this week in the ongoing case between the CFTC and PredictIt.
On or before Thursday, the CFTC must submit its rebuttal to the plaintiff’s response to its request for ending the injunction and the appeal.
Plaintiffs Claim CFTC Violated Injunction
Just as the CFTC called out the plaintiffs for not disclosing that PredictIt and Aristotle knew about the CFTC’s allegations before the August letter, the plaintiff’s response filed last week called out the agency.
For example, the plaintiffs argue that the CFTC had “at least seven” filings before its March 3 filing where it could have provided that information, but it never brought that up.
Rather than dismissing the case, the plaintiffs want the court to find the CFTC in contempt for what it said is a violation of the injunction.
“The CFTC is proposing that the parties start from the beginning, because it saw the writing on the wall and wanted to dodge a feared ruling from this Court and to continue its struggle against the PredictIt Market through other methods,” the plaintiffs wrote. “The issue is that this Court had enjoined such behavior.”
The plaintiffs seek attorneys’ fees incurred for having to respond to the motion plus “any costs associated with anxious investor behavior” that’s due to the CFTC’s actions.
“Disregarding injunctions has consequences, and they usually exceed a government agency just having to apologize,” the filing stated.
How CFTC Actions Have Affected PredictIt’s Markets
On Friday, I spoke with Pratik Chougule, an author, a foreign policy political consultant, and host of the Star Spangled Gamblers podcast. He’s also a trader on the PredictIt exchange.
Chougule told Casino.org that several traders chose to exit the market shortly after the August letter, and some more decided to leave after the midterms concluded. As a result, it’s caused liquidity in the markets to drop.
But I think that traders overreacted,” he said. “I think that for the time being until, as we discussed, the legal case really has been exhausted, I see no real reason to withdraw