The PredictIt election betting market is scheduled to close by February 2023
On 4th of Augustthe The CFTC rescinded PredictIt’s no-action letterwhich allowed PredictIt to offer choice bets under certain conditions.
The CFTC did not specify which regulations PredictIt violated. However, PredictIt is expected to liquidate its event contracts by February 15, 2023. So bettors could lose a big election betting market after the 2022 midterms.
PredictIt is a research project from the Victoria University of Wellington in New Zealand. Their goal is to collect public opinion to see if it can be more accurate than polls and experts.
PredictIt first received its no-action letter in 2014. It was allowed to offer choice bets as long as no market had more than 5,000 traders and no user could invest more than $850 in a trade. These conditions kept the scope of PredictIt small and ensured that it could not create a mass election betting market. It was a compromise between allowing potentially valuable research into the wisdom of the masses and financial law.
Political props, parlays and futures could be further pushed to offshore locations as the end of one of the best election betting outlets available looms. Domestic demand for election betting could also increase following the closure of PredictIt.
Where PredictIt might have gone wrong
PredictIt may have lost its no-action letter in part due to the rise in popularity of sports betting. States have paid more attention to sports betting regulations as more and more of them legalized sports betting. After regulatory failures like the one in Colorado, it would be surprising to see federal agencies remain neutral on sports betting and related services.
This could be part of a greater sensitivity to the popularity of sports betting and, by extension, election betting. The United States has resisted the legalization of election betting since scientific polls replaced sports betting odds as the preferred polling method. So this could be part of a larger crackdown on the potential gamification of something as serious and consequential as the US elections.
However, the American electorate may not share this attitude for much longer.
Demand for a US election betting market
Two states have attempted to legalize election betting. Nevada tried Legalize election betting Markets in 2013 and failed. In 2020, a West Virginia lottery official allowed election bets before the governor closed them. With the expansion of sports betting, American voters have shown a desire for legal election betting.
Given the entertainment value of American elections, it is not surprising that many voters would like to bet on elections. Treat many Americans Politics like sports anyway. That was the result of a survey 41% of voters believed that winning was more important than politics, while 35% felt the opposite.
Entrenched us-versus-them attitudes have already changed the way Americans vote. Political polarization has reached dangerous levels after an American president made public health and the outcome of a fair election party issues. partisan interpretations January 6th hearings show voters swallowing what their parties are telling them. Election betting cannot do anything to voters that they have not done to themselves.
However, an argument that voters can’t handle election betting is valid. A legal election betting market must not lead to election manipulation. But with Republican candidates claiming their losses are attributed solely to voter fraud, a surge in election betting could fuel suspicions of a rogue election.
Election betting itself must not pose a threat to democracy. But voter reactions to lies and spin suggest American voters may lack the ability to separate entertainment from reality.