Ever wonder about the legality of PredictIt, where is essentially political race gambling, done via "buy/sell" models like the stock market?

They have existed untouched by the US government since 2014, thanks to a "No Action" letter from the CFTC (Commodities Futures Trading Commission). A No Action letter is essentially a promise from the CFTC that they're going to leave you alone. It means that, if you keep to certain terms, they won't interfere with your operations, while also not declaring your operation legal.

PredictIt is run by Victoria University of Wellington, New Zealand. The fees are incredibly high. I've been profitable on there despite the fees because most political traders are morons, but it's the equivalent of playing in a good poker game with insanely high rake.

On August 4, 2022, the CFTC has withdrawn the No Action letter from Victoria University/PredictIt, thus killing their legalized status. It is not clear exactly why, but apparently the CFTC thinks that PredictIt has violated the terms it agreed upon in 2014.

DMO [CFTC Division of Market Oversight] has determined that Victoria University has not operated its market in compliance with the terms of the letter and as a result has withdrawn it.



However, things aren't as bad as they appear -- at least not yet. PredictIt has a grace period to continue operating until February 15, 2023. This means they can continue settling existing bets/markets, and you can continue to deposit and withdraw. However, they are not adding new bets/markets, and it is "unclear" how anything settling after 2/15/23 will be handled (uh oh!) This means, for example, you should NOT be betting on the 2024 Presidential election!

Here's their statement about it: https://www.predictit.org/platform-announcements


It is possible they will resolve the matter with the CFTC before February 2023. However, I find it more likely that the CFTC has found some sort of major violation of the spirit of their No Action agreement, and is tired of PredictIt's existence.

I wouldn't say you have to withdraw right now, and there might still be money to be made in the November 2022 elections, but definitely hit the withdraw button after those are over.

Or withdraw now if you want to be on the safe side, but be aware that withdrawal fees are high, so it's a mistake to withdraw and redeposit in November, and have to pay to withdraw a second time.