Key Moments:
- PredictIt has received CFTC approval to relaunch in the United States as a licensed political prediction market.
- Aristotle has secured both Designated Contract Market (DCM) and Derivatives Clearing Organisation (DCO) licenses, enabling in-house clearing and settlement of trades.
- The new structure represents a resolution to longstanding legal disputes and signals a major development for prediction market regulation in the U.S.
Regulatory Approval Marks a New Era
PredictIt is set to reenter the U.S. market following regulatory clearance from the Commodity Futures Trading Commission (CFTC). Operator Aristotle confirmed that it has obtained licenses to act as both a Designated Contract Market (DCM) and a Derivatives Clearing Organisation (DCO), paving the way for a freshly organized political prediction market expected to launch next month. This milestone follows years of legal contention and highlights the evolving approach to political wagering in the United States.
@PredictIt (finally) gets CFTC approval for a prediction market DCM. They have been going since 2014 (a long time in this space) and brought about renewed interest in elections futures. Great to see more competition in this space! (1/2) https://t.co/L8oEIpoH0A
— Koleman Strumpf (@KolemanStrumpf) September 7, 2025
The Mechanics of Political Prediction Markets
Political prediction markets operate at the intersection of finance and political events, allowing participants to buy and sell contracts based on political outcomes. Prices fluctuate according to market sentiment, reflecting collective beliefs about future events. Advocates argue that these markets encourage more careful analysis than conventional polling methods, with real money on the line prompting participants to scrutinize the odds.
From Legal Uncertainty to Settlement
PredictIt’s return comes after a period characterized by regulatory challenges. Initially launched in 2014 under the auspices of Victoria University of Wellington in New Zealand, the platform gained rapid popularity by permitting trades relating to political events. Resembling a betting exchange, PredictIt attracted users interested in the odds of elections and key political developments.
In 2015, the CFTC granted the platform “no-action” relief, allowing operations under specific terms. However, this relief was revoked in 2022, triggering a court battle that endured for several years. The conflict reached a resolution in June 2025 when the CFTC and PredictIt concluded a settlement in the US District Court for the Western District of Texas, authorizing Aristotle to formally seek market licenses. This development is seen as a sign that U.S. regulators might be ready to adopt more structured oversight of these markets.
Transformation into a Licensed Exchange
PredictIt’s new chapter reflects an industry-wide shift: from an experimental academic platform studying crowd wisdom to a regulated, mainstream marketplace for political forecasting. Now regulated under the CFTC’s framework, the exchange will enter the market with the ability to both list contracts and handle trade clearing internally, thanks to its DCM and DCO approvals.
John Aristotle Phillips, Aristotle’s chief executive, stated: “We thank the CFTC staff and Acting Chair Pham for their diligence in reviewing and approving our applications. With more than a decade of experience operating PredictIt, we’re excited to bring that knowledge and community to a fully regulated marketplace.” Phillips described the internal clearing and settlement mechanism as “the most robust and transparent version” of their vision for the platform.
Wider Impact on the Prediction Market Landscape
PredictIt’s revival occurs against a backdrop of heightened scrutiny for political prediction platforms. For example, Polymarket has made efforts to bolster its reputation, including appointing Donald Trump Jr. to its advisory board, but also had to settle with the CFTC and restrict access for U.S. traders in 2022. Unlike in some other jurisdictions, prediction markets in the United States operate in a regulatory gray zone, straddling both gambling and financial service regulations. Some market observers suggest that PredictIt’s pathway to DCM and DCO licensing may serve as a model for other platforms, provided they are able to meet established regulatory standards.
Looking Ahead
The launch of PredictIt under full CFTC oversight presents new opportunities for traders looking for regulated political market participation. Proponents maintain that such markets provide insight into genuine shifts in public sentiment, while critics continue to warn about the blurring lines with gambling. With stricter regulations now in place, all eyes are on how both institutional and retail participants will adapt to the new environment, marking a pivotal transformation for prediction markets in the United States.
| Event | Outcome |
|---|---|
| CFTC DCM & DCO Licenses Granted | PredictIt authorized to operate as a regulated exchange |
| Legal Dispute Settled (June 2025) | Regulatory path cleared for relaunch |
| Expected Relaunch | Next month |
- Author
Daniel Williams
