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Jerome García July 25, 2023 3 min read
US Fifth Court of Appeals Sides with PredictIt in CFTC Lawsuit
The latest decision sends the case to a district court and represents a major milestone in the lawsuit between PredictIt and CFTC
PredictIt is a popular platform that enables customers to place wagers regarding the outcome of financial, as well as political events. The betting platform has been involved in a lawsuit for quite some time now after the Commodity Futures Trading Commission (CFTC) asked it to discontinue its offering last summer. In response, PredictIt filed a lawsuit that continues to this day. Yet, a filing with the US Fifth Circuit Court of Appeals reveals that the betting platform may ultimately prevail in its lawsuit against the CFTC.
It was back in 2014 when the Victoria University of Wellington secured a no-action letter (NAL) for PredictIt from the CFTC. This effectively enabled the platform to operate without the need to register with the CFTC under the Commodity Exchange Act. However, in August last year, CFTC announced the rescission of the NAL, while at the same time asking PredictIt to discontinue its offering.
On Friday, the US Fifth Circuit Court of Appeals took the side of PredictIt, asking a district court to ensure that CFTC doesn’t take further actions against the platform. “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,” wrote Fifth Circuit Judge Stuart Kyle Duncan.
Platform’s CEO Deems the Court’s Decision a Sweeping Victory
In light of the recent ruling by the US Fifth Circuit Court of Appeals, the lawsuit is now heading to the US District Court for the Western District of Texas. While the case is still ongoing, the latest action still represents a major milestone in the legal battle 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.“John Phillips, CEO and co-founder at PredictIt
John Phillips, PredictIt’s CEO and co-founder, shared his excitement about the US Fifth Circuit Court of Appeals’ decision from Friday, acknowledging that it represents a major victory for the platform. He explained that the court effectively recognized that in 2014, the platform secured a license, in the form of NAL. Finally, Phillips said that the court also found the decision by CFTC to stop PredictIt’s operations as unjustified.