PredictIt and its supporters received a victory in a federal courtroom Tuesday in its quest to keep the political futures exchange operational. However, the plaintiffs did not get everything they were seeking.
At least not yet.
A three-judge panel from the Fifth Circuit Court of Appeals denied a motion made by the Commodity Futures Trading Commission (CFTC) to dismiss the lawsuit initially filed by the online political futures exchange in a Texas federal court. The CFTC argued the case should be heard in the District of Columbia federal district court instead, and last month, US Magistrate Judge Mark Lane recommended to US District Judge Lee Yeakel that the case be moved to DC.
PredictIt, along with traders on the exchange and professors who use the trading data for research, sued the federal agency in September after the CFTC revoked the no-action letter in August. That no-action letter, which was issued in 2014, allowed the exchange to operate in the US.
In the revocation letter, the commission said PredictIt could not offer any new markets and would need to liquidate all existing markets by Feb. 15. That includes markets that are still active, such as those for the 2024 presidential election.
No Ruling on Injunction Yet
What PredictIt and the other plaintiffs did not get on Tuesday was a ruling on its request for an injunction to allow its existing markets to continue operating after Feb. 15. The plaintiffs took their case to the Fifth Circuit after they did not get a response from the US District Court for the Western District of Texas before the holidays.
Appellants’ opposed motion for an injunction pending appeal is carried with the case,” Judges Jennifer Walker Elrod, James E. Graves Jr., and James C. Ho said in the order. “Appellants’ request in the alternative for mandamus relief is also carried with the case. This appeal shall be expedited forthwith to the next available merits panel.”
An “expedited briefing schedule” was expected to be sent to lawyers for both sides, according to a memo attached to the order.
PredictIt has requested a ruling on the injunction because it said it would need to develop a way to pay out futures contracts that were not settled. On PredictIt’s exchange, traders buy and sell shares of a possible political outcome – for example, Donald Trump winning the 2024 presidential election. Traders who hold contracts on the winning, or correct, outcome receive $1 per share.
What PredictIt and the CFTC are Arguing
Leaders of the exchange say a new system would take a significant amount of time and resources to develop. If they were to begin work on that system before it received an injunction, the exchange would be unable to recoup those costs.
While PredictIt is suing to resume offering new markets, the injunction only seeks to continue existing ones.
Traders joined the lawsuit saying the CFTC’s decision to end trading by Feb. 15 has greatly affected their investments.
Besides seeking to move the case to DC, the CFTC has also argued that PredictIt and the other plaintiffs cannot sue because the revocation letter is not a “final agency action.”
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