Published at 09:26 UTC on December 12, 2022.
Updated December 12, 2022 at 09:34h.
Steve Bittenbender
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PredictIt, a federal judge from Texas, recommends that he move a suit against the Commodity Futures Trading Commission(CFTC), by PredictIt along with other defendants to the US District Court at Washington DC.
On Sept. 1, President Joe Biden will speak in Philadelphia. On Monday, a federal judge in Texas issued a recommendation that PredictIt’s lawsuit against the CFTC be moved to a federal court in Washington DC. PredictIt wants to ensure that its political markets, which include the 2024 Presidential Election, remain open beyond February 15. (Image: President Joe Biden/Facebook
Monday’s eight-page ruling was made by Magistrate Mark Lane. He issued the eight-page ruling Monday, less than two months after holding a hearing in Austin Federal Courthouse on Dec. 1, regarding the same matter.
PredictIt, an online trading site for political futures market, along with its parent company Aristotle International, several PredictIt traders, and college researchers filed suit against the CFTC in September after the federal regulatory agency pulled its “no-action” letter it issued permitting the exchange eight years ago. Kevin Clarke (a trader) and the other plaintiffs filed suit in Texas.
The CFTC, which is based in Washington, argued the nation’s capital was the more appropriate venue for the case.
Lane was also in agreement.
When asked why they filed the case here, plaintiffs repeatedly answered they filed here because Mr. Clarke resides here,” Lane wrote. “Plaintiffs repeatedly emphasized Mr. Clarke’s residency, although they conceded that from an economic perspective Mr. Clarke was not the largest investor or faces the greatest potential financial loss of the plaintiffs. Even though there are many plaintiffs in this case, the plaintiffs argue that the issue is how Mr. Clarke was affected by the removal of his no-action letters.
“Plaintiffs’ insistence on the importance of Mr. Clarke and reasons for filing the suit here still confound the court, even after the hearing. The two entity plaintiffs—PredictIt, Inc. and Aristotle International, Inc.—are both based in the District of Columbia.”
Lane’s recommendation now heads to US District Judge Lee Yeakel, who will make the formal decision of whether to move the case from Texas to DC.
Plaintiffs ‘Likely’ to Contest Recommendation
A spokesperson for PredictIt told Casino.org the plaintiffs “likely” will submit an objection regarding Lane’s recommendation to Yeakel.
The CFTC’s desire to move this case away from the plaintiffs and onto their home turf is disappointing,” said Lindsey Singer, PredictIt’s public relations director. “The plaintiffs and others impacted by their actions deserve answers today, not delay tactics.”
In its Aug. 4 letter revoking PredictIt’s status, the CFTC said it wanted the exchange to shut down by Feb. 15. PredictIt did not create any new markets since then. The lawsuit was filed by PredictIt to prevent the CFTC closing its markets. They have sought an injunction that would allow the futures markets for 2024, as well as those for 2020, to continue their normal course.
The hearing for the temporary injunction was not set.
CFTC also seeks dissolution
The CFTC filed to have the case dismissed completely, in addition to seeking a change of venue.
Lane heard the arguments of both parties regarding Yeakel’s dismissal request, but he didn’t make any recommendation. Still, he seemed to indicate that the plaintiffs’ rationale against the dismissal was not entirely compelling.
“The CFTC argues that issuance of a no-action letter and its withdrawal are not final agency actions and that Plaintiffs lack standing to sue,” Lane stated in a footnote in his recommendation. “Plaintiffs argue the no-action letter constituted a license, and they are beneficiaries of the no-action letter. The Plaintiffs are limited in their ability to draw parallels to other cases. Plaintiffs’ inability to cite cases directly holding that a no-action letter is the equivalent of a license or other final action or that third parties are beneficiaries to a no-action letter with standing sue leaves the court highly skeptical of their arguments. Nonetheless, as this court is not reaching the motion to dismiss, Plaintiffs will have a second chance to convince a court that their claims should move forward.”
PredictIt Needs an Injunction Rule Soon
Monday’s recommendation was a blow to PredictIt and other plaintiffs. The plaintiffs have been pushing for a court decision by Christmas on the request for an interim injunction.
PredictIt’s parent company, Aristotle has stated that they need to start working on a system which would enable them to settle contract values between $1 and zero. That’s a platform that would need to be built from the ground up and require nearly all staff to develop it. In addition, should an injunction ruling in their favor come after they’ve started work, PredictIt and Aristotle say they would be out hundreds of thousands of dollars with no way to recoup the money.
The CFTC counters by stating that the revocation and cancellation of no-action letters is not a final decision. The Aug. 4 letter used the word “should” regarding the Feb. 15 liquidation date. It would seem that PredictIt could be sued if markets were still being operated after the liquidation date.
