PredictIt wins latest stage of appeal against federal closure order
Appeals court judge sides with embattled political betting operator ordering continuation of case
Backers of political betting operator PredictIt have won the latest stage of the long-running legal challenge against its enforced closure by the Commodity Futures Trading Commission (CTFC).
On Friday, justices in the Fifth Circuit Court of Appeals reversed an earlier District Court denial of a preliminary injunction to suspend the closure of the site, pending a full hearing of claims by the site’s operators.
The appeals court panel voted 2-1 in favor of reversing the district court ruling, having heard oral arguments from both sides in February. This is the second attempt by the CTFC to enforce the closure of the site, with the same court siding with the operator back in January.
Following this prior victory, in March the CTFC withdrew the prior cancellation of its August 2022 no action letter, launching an appeal against the January stay of execution.
In its place, the agency substituted a new letter that “determined as a preliminary matter that [the no-action letter] is void and should be withdrawn.”
This new letter gave some explanation for rescinding the no-action letter and gave Victoria University a chance to respond to the CTFC’s claims in court.
PredictIt operates on a prior CTFC permission first given in 2014 which has been allocated to the Victoria University of Wellington, with all betting supposed to take place under the condition that it operates on a non-profit basis purely for research purposes.
The site allows quasi-wagering on political events and had become popular among US broadcasters in the run-up to political events such as the US Senate and Presidential elections.
The site was initially ordered to be closed by the CTFC in August 2022, and would have closed on February 15 but the legal challenge by the site’s owners has seen this deadline extended further and further ahead.
The CTFC had moved to dismiss the PredictIt appeal as moot, with the site’s backers opposing and moving for sanctions against the action, arguing the CTFC had violated the earlier injunction preventing the site’s early closure.
In May, the court of appeal again denied the CTFC, enjoining it from forcing the closure of the case for a period of 60 days after a final judgement in the case.
In this latest appeal, the CTFC had argued that the revocation of its no-action letter was not a “final agency action” and as such was unreviewable by the courts, something which the court of appeal would ultimately disagree with in Friday’s ruling.
“The CFTC has since raised a host of objections to our even hearing the appeal, arguing that it is moot, that there has been no final agency action, that revoking the no-action letter was within the agency’s discretion, and that Appellants lack standing. These threshold objections are all meritless,” the presiding panel, Judges Graves, Ho and Duncan, wrote in their response to the appeal.
“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,” the panel concluded.
Based in New Zealand, PredictIt offers Americans the chance to browse a variety of political markets and bet on whether an event will or will not happen by purchasing a ‘share’ in that event. It also allows trading on shares in different events between users, with all purchases/bets capped at $850.
PredictIt is now selling shares in 10 political markets including whether the forthcoming Republican Party’s 2024 presidential nominee will be Florida Governor Ron DeSantis or former President Donald Trump.
The site is also taking bets on whether current US President Joe Biden will resign in his first term and if a woman will be elected to the top job in 2024.