Why I'm Suing the Federal Government over PredictIt
On September 9, a group of investors trading on PredictIt and academics that study its data, along with its technology provider Aristotle International, filed suit against the Commodity Futures Trading Commission (CFTC) in the Western District of Texas over its plan to shut down the website. (complaint here)
I’m proud to announce that I am personally joining the lawsuit. If you have used PredictIt and would like to also become involved, please reach out at PredictItSuit@outlook.com. Don’t wait, as the plaintiffs list is going to be finalized by this Tuesday, October 4. This will not cost you any legal expenses. It would be a major help to have other academics, intellectuals, and regular PredictIt users join the suit.
I’ve attached the following statement to the court about why PredictIt should continue to operate.
My name is Richard Hanania. I am the President of the Center for the Study of Partisanship and Ideology and a research fellow at the University of Texas.
I am also – due to my study of expertise and belief in intellectual accountability – a long-time user of PredictIt and a believer in prediction markets. I therefore have over the years made bets at PredictIt and publicly kept track of my portfolio, while encouraging other public intellectuals to do the same. Here are some of my writings on the topic.
When I present an opinion, often many will agree and others won’t. One way I have found to settle a debate, or at least move it forward, is to ask if someone believes what they are saying, whether they would be willing to put their money on it. Such an accountability mechanism benefits public discourse. If someone says that a candidate has a “good” or “bad” chance at winning an election, for years I have found it useful to ask them what exactly they mean by that, and whether they would buy or sell at the current PredictIt price.
I’m sure many scholars have presented the court with evidence about how prediction markets are useful in providing information about the likelihood of future events. I would like to stress the potential for PredictIt and other sites like it to overcome many of the shortcomings in American intellectual life, including decreasing civility and our seeming inability to overcome partisan differences and have conversations across political tribes. When I speak in the language of betting markets, I find that it is easier to find common ground with those of differing political views. And when I disagree with them, I am better able to do so constructively when we direct our attention towards confidence intervals and probability. In the long run, some are proved right and others wrong, which allows for all of us to update our beliefs and ultimately better understand the world.
Prediction markets are not simply a way to uncover information. They also encourage intellectual humility and civil discourse, and I don’t believe it’s outside of the realm of possibility to believe that they can play a major role in healing our fractious politics.
President, Center for the Study of Partisanship and Ideology
Research Fellow, University of Texas, Salem Center
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What exactly are the responsibilities of people who join the lawsuit?
The CFTC action against PredictIt got me to open an account and start trading, and whenever I hear about it I add more money. I also don't plan on using Kalshi.
This might just be legal strategy, but I am disappointed that the suit is only asking for the revocation to be stayed until existing contracts are wound down. I had hoped to see some kind of argument against the CFTC's authority in this case. It seems to be generally accepted that the legality of prediction markets is within their purview to decide, but wholesale banning of market verticals screams regulatory overreach to me. The court could throw it out, but let them do that.