{"id":262691,"date":"2023-03-06T01:00:44","date_gmt":"2023-03-06T07:00:44","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=262691"},"modified":"2023-03-06T11:56:20","modified_gmt":"2023-03-06T17:56:20","slug":"cftcs-predictit-claims-focus-on-relationship-between-aristotle-and-new-zealand-university","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/cftcs-predictit-claims-focus-on-relationship-between-aristotle-and-new-zealand-university\/","title":{"rendered":"CFTC’s PredictIt Claims Focus on Relationship Between Aristotle and New Zealand University"},"content":{"rendered":"

Nearly nine years ago, when the US Commodity Futures Trading Commission granted a New Zealand university a no-action letter to establish what\u2019s known as PredictIt, an online political futures exchange, the federal regulatory agency set some ground rules for the site.<\/p>\n

\"Victoria<\/a>
A ground-level shot of the Victoria University of Wellington’s Pipitea Campus. Last week, the US Commodity Futures Trading Commission sent the New Zealand school a new letter regarding findings on PredictIt, the online political futures exchange it created nine years ago. (Image: Victoria University of New Zealand)<\/figcaption><\/figure>\n

The CFTC\u2019s requirements included that Victoria University of Wellington operate the exchange as a nonprofit venture. However, in a letter sent last Thursday to Victoria University Vice-Provost of Research Dr. Margaret Hyland, CFTC Division of Market Oversight (DMO) Director Vincent McGonagle said its staff has determined that Aristotle International, a for-profit company based in Washington, DC, is the actual operator of the exchange.<\/p>\n

That’s one of three findings announced by the CFTC<\/a>, seeking to revoke PredictIt\u2019s no-action status.<\/p>\n

A partially redacted copy of the letter was included in a filing the commission made with the US Fifth Circuit Court of Appeals on Friday. The CFTC wants to nullify an injunction the court ordered last month<\/a> that allowed the exchange to continue trading past a February 15 liquidation date the commission listed in a previous letter revoking the no-action status.<\/p>\n

In Thursday\u2019s letter, McGonagle said the agency was canceling the August 4 letter and issuing the new letter in its place. The new communique is considered an \u201cinitial determination\u201d letter and allows the university to respond by March 20.<\/p>\n

\n

The purpose of Victoria University\u2019s request and DMO\u2019s no-action letter was that the market \u2026 would be unregulated,\u201d McGonagle wrote. \u201cYet, because of these violations, DMO and other CFTC staff have been required to devote considerable time over the last nearly nine years to the market. This has far exceeded the level of CFTC staff involvement contemplated by (the no-action letter), and we believe it is not an appropriate use of taxpayer resources.\u201d<\/p>\n<\/blockquote>\n

The August 4 letter is the focus of a lawsuit filed by PredictIt and Aristotle, along with several traders and researchers who use the site. In Friday\u2019s filing, the CFTC argued that since it withdrew the old letter and issued a new one, the injunction should be lifted, and the plaintiffs\u2019 appeal should be dismissed.<\/p>\n

CFTC Questions University’s Role<\/h2>\n

The redacted portions of the letter concern the CFTC\u2019s claims that Aristotle operates the exchange and that both a university subsidiary and Aristotle have profited from operating the exchange.<\/p>\n

According to a footnote inserted in the letter as part of the court filing, the CFTC said Victoria University requested \u201cconfidential treatment\u201d to references of a document. The redactions appear to be for an agreement between the university and Aristotle for services connected to PredictIt\u2019s operations.<\/p>\n

When it applied for the no-action letter, the university said it would contract a third party to perform \u201cknow your customer\u201d and age checks on individuals wanting to participate in the exchange.<\/strong><\/p>\n

\u201cWhile the university may have been operating the market at its inception, it appears that at some point, the university ceded operational control of the market to Aristotle \u2026 Indeed, recent public statements reflect that the university may not have been operating the market since its inception and rather that Aristotle played a leading \u2013 and undisclosed \u2013 role in the development and launch of the market,\u201d McGonagle wrote in Thursday\u2019s letter.<\/p>\n

McGonagle\u2019s letter also cited claims made by Aristotle\u2019s attorneys during oral arguments before the Fifth Circuit last month that indicated PredictIt was a joint venture from the beginning. That, the director said, would be \u201cinconsistent with the conditions\u201d of the no-action letter.<\/p>\n

In 2014, Victoria University proposed the exchange because it believed the markets would provide valuable data to researchers studying political science, game theory, microeconomics, and other fields.<\/p>\n

Victoria University ‘Assessing’ CFTC Letter<\/h2>\n

The PredictIt exchange offers two-way markets for political events. Since the US doesn’t allow wagering on politics, it\u2019s considered the closest option to political betting.<\/p>\n

Winning contracts are paid out at $1 per share, and traders can move in and out of positions until that market closes. In addition to the claims about the university’s and Aristotle’s relationship, the CFTC also claims that 17 markets offered on PredictIt violated the no-action letter’s terms.<\/p>\n

\n

Since the August 4 letter, PredictIt hasn’t issued any new markets for trading. While the federal lawsuit sought to overturn the letter completely, the injunction sought — and received — by the plaintiffs only focused on keeping existing markets, including those tied to the 2024 presidential election<\/a>, open past February 15.<\/p>\n<\/div>\n

Victoria University responded to a request for comment from Casino.org<\/i> on Sunday evening (Monday in New Zealand).<\/p>\n

\u201cTe Herenga Waka (the Maori name for the school) \u2014 Victoria University of Wellington confirms it has received further correspondence from the CFTC regarding PredictIt, which it is currently assessing,\u201d the statement said. \u201cThe university has no further comment at this time.\u201d<\/p>\n

Aristotle General Counsel David Mason, a former chairman of the Federal Election Commission, said in a statement Friday the company rejects the CFTC\u2019s findings.<\/p>\n

\u201cWe plan to continue to fight this prejudiced attempt to shut down this useful market,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Nearly nine years ago, when the US Commodity Futures Trading Commission granted a New Zealand university a no-action letter to establish what\u2019s known as PredictIt, an online political futures exchange, the federal regulatory agency set some ground rules for the site. The CFTC\u2019s requirements included that Victoria University of Wellington operate the exchange as a […]<\/p>\n","protected":false},"author":45,"featured_media":262692,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[61,13592],"tags":[85357,82218,82190,85358],"acf":[],"yoast_head":"\nCFTC's PredictIt Claims Focus on Aristotle-Victoria U. 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