PredictIt Traders, University Educators, and Market Service Provider Aristotle Sue Regulator Over Market Disruption
The lawsuit filed today seeks CFTC disclosures, questions legality of interference with PredictIt
WASHINGTON, September 12, 2022 (Newswire.com) - On Friday, PredictIt traders, academic users and market technology pioneer Aristotle filed a lawsuit in U.S. Federal District Court for the Western District of Texas asking the Commodity Futures Trading Commission (CFTC) to justify the forced winddown in 2023 of the popular event prediction market, PredictIt. The suit seeks an order blocking the CFTC's action and asks the court to allow all existing markets to resolve in an orderly manner.
"We sued because we believe the process by which the CFTC revoked the No Action Letter was very unfair. In particular, the agency failed completely to take into account the interests of traders who invested in perfectly legal contracts extending beyond February 2023 and of academic users of PredictIt data," said David Mason Aristotle General Counsel and former Federal Election Commission (FEC) Chairman.
"The commission took this step with no reasoned explanation for its decision, no explanation of facts that would support its decision, no transition plan for addressing scores of existing contracts held by tens of thousands of traders, and no consideration of any alternatives to the chaotic, disruptive, and economically damaging wind-down of the market its decision forces," the lawsuit says in part.
Plaintiff Kevin Clarke has been a PredictIt trader since 2020. "When a government entity takes this kind of action, they should have to explain why to those impacted. It's unacceptable for an agency to tell an individual or industry that its business must end, while attempting to fend off any scrutiny on the mere possibility that its own internal processes may have not ended. PredictIt has made me a more conscious and thoughtful consumer of political information, a trait that should be encouraged in today's environment."
The CFTC action taken on Aug. 4, 2022, threatens to harm not only the value of modest investments of more than 80,000 PredictIt traders but the quality of the anonymized data used by more than 200 academic researchers and university educators. Their interests have been disregarded by this errant CFTC action.
Aristotle is the contract service provider for the PredictIt Market, which has operated under No-Action Relief CFTC 14-130 since 2014.
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