Press Release
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Jul 24, 2023 16:05 EDT

United States Fifth Circuit Court of Appeals finds CFTC’s 2014 no-action letter constitutes a “license”

WASHINGTON, July 24, 2023 (Newswire.com)
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A decision issued by the United States Court of Appeals for the Fifth Circuit is a striking victory for the popular prediction market platform, PredictIt (http://www.predictit.org/markets), as well as more than a dozen plaintiffs – including Aristotle, traders and academic data users – in a case against the Commodity Futures Trading Commission (CFTC).

Crucially, the Court finds that under the Administrative Procedure Act (APA) the no-action letter (NAL) issued to Victoria University of Wellington under which PredictIt operates is considered a “license,” and that its withdrawal in August 2022 was a “final agency action,” making the attempted withdrawal of the license reviewable in court.

According to Aristotle and PredictIt co-founder and CEO, John Phillips, in response to the decision:

“This is a sweeping victory for prediction markets like PredictIt and those who find value in the insights they provide. One of the highest courts in the country agrees that in 2014 PredictIt was issued a license to operate, and the CFTC’s attempts to take that away were unjustified.” 

The ruling remands the case to the United States District Court for the Western District of Texas with an order to enter an injunction against the CFTC and proceed with a hearing on the merits of the PredictIt plaintiff’s claims.

Major findings: 

  • The 2014 NAL and the attempts to withdraw it constitute “agency action” under the APA.
  • The 2014 NAL constitutes a license under the APA.
  • The withdrawal effort is “final action” because there is no way to appeal within the agency and beneficiaries could no longer rely on the NAL.
  • The March 2023 preliminary withdrawal letter violated the Fifth Circuit injunction and is procedurally deficient 1) because it does not provide Victoria University with an opportunity to “demonstrate or achieve compliance” as is required for revocation of a license, 2) because the reasoning provided is inadequate and 3) because the reasoning constituted a post hoc rationalization for a decision the agency had already made.

Market operator Aristotle and its partners will continue to review the implications of the Court’s decision over the coming weeks to determine the next course of action. 

Please contact press@aristotle.com with questions. 

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Source: Aristotle