PredictIt, which rose to prominence as a provider of election derivatives, said that under a new agreement with the U.S. Commodity Futures Trading Commission (CFTC), the previous $850 contract limit per customer has been increased to $3,500 - the federal limit for individual campaign contributions. The Washington, D.C.-based company also added that the previous limit of 5,000 traders per event contract has been lifted. Now that there is no trader cap, this could increase liquidity for various political event contracts. Previously, PredictIt was under regulatory suspension.

“With enhanced compliance protocols and a deep commitment to excellence, PredictIt has re-emerged after the regulatory pause not only as a leader, but as the benchmark for what real money prediction markets can and should be,” a post on the company’s website said.

Despite the regulatory headwinds, PredictIt has largely avoided the sports betting storm facing competitors like Kalshi and Polymarket. Kalshi, in particular, is under scrutiny from multiple attorneys general for offering sports betting contracts without a state gaming license. The company argues it can do so because it is regulated by the federal government.

PredictIt and the CFTC recently reached a settlement

News of PredictIt’s expanded trading limits comes three weeks after the company reached a settlement in a protracted lawsuit with the U.S. Commodity Futures Trading Commission (CFTC). In 2014, the CFTC approved PredictIt to offer political derivatives without fear of enforcement action.

Eight years later, that approval was revoked, and the CFTC required the prediction market operator to liquidate open positions by February 2023. PredictIt challenged the decision in court, sparking a protracted legal battle.

The settlement of the CFTC/PredictIt case may be the latest signal of a more favorable regulatory regime for prediction market companies, opening the door to the aforementioned contract limit increases and potential liquidity enhancements.

According to a document filed in June with the U.S. District Court for the Western District of Texas, the parties have reached an agreement in principle to resolve the litigation. In the coming days, the parties will file documents requesting the court to issue an order implementing the resolution. Until then, the parties respectfully request that the court continue to stay pending motions.

PredictIt targets more markets

In addition to announcing higher contract limits, PredictIt also announced more futures contracts that are available for traders to evaluate.

We’re significantly expanding the number and diversity of available markets – giving traders more ways to stay informed on breaking news, policy changes, and election developments in real time,” the post reads.

This means that PredictIt has learned from Kalshi’s sports betting-related problems and will continue to focus on political derivatives. PredictIt currently offers 25 markets related to politics, with the largest volume being the New York mayoral race.