I think it's unfair to jump to the conclusion that Kalshi is to blame for regulators banning PredictIt. From the link you posted, PredictIt promised the regulators they would:
* be small-scale and not-for-profit
* be operated for academic and research purposes only
It doesn't really say what "small-scale" means, but obviously, if PredictIt keeps being successful and growing, eventually they will no longer be small scale. PredictIt was always in a situation where they had to make a different deal with regulators, eventually, as long as they continued to grow.
If you want to blame the CFTC for shutting down PredictIt, Intrade, all of those other prediction markets, then yeah, I agree! I wish they had just been much more permissive long ago. We should blame the CFTC for being too strict. But it doesn't seem fair to blame Kalshi just because they might be the ones to finally convince the regulators to allow one of these.
I hope Kalshi is the group to figure this out, make prediction markets popular, and that prediction markets can finally get the attention from wider society that they deserve.
What a ridiculous regulatory decision. They have to be "small scale?" So it's ok for anybody to do it, but if too many people actually do it, then no one is allowed to anymore.
I went deep doing research on prediction markets a few months ago, and no, it's not an unfair conclusion.
Brian Quintenz is a Republican financial manager who was nominated to be a commissioner of the CFTC by Trump in 2017.[1]
During his time at the CFTC, as I recall, there was heavy bipartisan action, which he was praised for.
Well, there's a slightly more cynical take that he was indeed completely crooked.
My memory is foggy, and I don't have time to grab sources just yet as I have a meeting coming up so I'll update this shortly, but he was then turfed out of the CFTC under Biden and promptly hired by Kalshi.
Given his record, it's less of a jump to see what Kalshi is doing as shady, but more of a smoking gun... PredicIt, which had been operating under a no action letter (NAL) from the CFTC since 2014 just happened to have that letter withdrawn a few months after Kalshi raises $30m at a Series A to take their platform live.[2]
From my point of view, this is classic American lobbying mafia style stuff. Prediction markets have been prevented from flourishing for decades, and now that the time has arrived, the crooked CFTC et al have cleaned the house so their chosen startup that they're deeply in bed with can thrive.
So the guy the administration fired is somehow also the guy to make the current CFTC do what he wants? I’m sure he knows the rules and institutional concerns of the CFTC, but why would he have undue influence over the person who replaced him?
I hear what you're saying, but I feel there is an assumption made by your counter-argument which insinuates that the CFTC is a functional and non-corrupt organization. My perspective, based on my research, seems to suggest otherwise.
Unfortunately, this seems to be endemic of American politics and government organizations.
In Kalshi's case, Brian Quintenz aside, let's talk about Jeff Bandman, who spent close to 3 years at the CFTC.[1] Well, after doing so, he became a regulatory strategy advisor for Kalshi.
Here I quote a Bloomberg article[2] on Kalshi from earlier this year:
"Eventually they tracked down a former CFTC official, Jeff Bandman, who assured them the landscape was changing; he agreed to help them navigate the agency and its characters."
So yeah, I'll concede that there are a few un-generous assumptions that need to be made to fully paint Kalshi as a bad actor in this situation, but given the various pieces of context available, I don't feel it's an overstep to call behavior like this out.
Ultimately Kalshi is set to be a unicorn startup, and I wish the founders success in their endeavors—they appear to be exceptionally bright and hard working individuals—but what appears to have transpired for them to have their shot doesn't sit right with me.
That article is super helpful - my take on it is that the fact Quintenz was a former hedge fund trader probably had a lot more to do with the approval than his later decision to work for Kalshi. And it’s interesting to note he was originally nominated to the CFTC by president Obama
* be small-scale and not-for-profit
* be operated for academic and research purposes only
It doesn't really say what "small-scale" means, but obviously, if PredictIt keeps being successful and growing, eventually they will no longer be small scale. PredictIt was always in a situation where they had to make a different deal with regulators, eventually, as long as they continued to grow.
If you want to blame the CFTC for shutting down PredictIt, Intrade, all of those other prediction markets, then yeah, I agree! I wish they had just been much more permissive long ago. We should blame the CFTC for being too strict. But it doesn't seem fair to blame Kalshi just because they might be the ones to finally convince the regulators to allow one of these.
I hope Kalshi is the group to figure this out, make prediction markets popular, and that prediction markets can finally get the attention from wider society that they deserve.