Recently, the Commodity Futures Trading Commission, or CFTC, withdrew its no-action letter from Victoria University of Wellington, which since 2014 has been allowed to operate the political prediction market PredictIt.
The original no-action letter allowed Victoria to operate limited-scope markets for political events for research purposes. Since its inception in 2014, data from PredictIt has been made freely available to researchers in a wide range of disciplines, including economics, statistics and political science. Research coming out of these markets has led to a deeper understanding of a wide range of topics including the impact of Brexit on trade between countries, the extent of Russian trolling on Twitter and what makes a trader financially successful.
From the perspective of Victoria’s initial mandate from the CFTC, PredictIt has more than upheld its end of the bargain. But beyond their use in public policy and social science research, political prediction markets serve an invaluable public good. It is in the public’s interest that prediction markets, such as PredictIt, be allowed to operate.
