PredictIt was launched on 3 November 2014. By March 2020, the website had approximately 100,000 active traders. The nonprofit educational project of the Victoria University of Wellington, New Zealand, "had to work around federal laws that prohibit online gambling and govern commodity futures trading." During the 2016 United States elections, PredictIt, along with other prediction market websites, received attention from various media outlets.
Trading format
PredictIt uses a continuous double auction to sell shares for each event in its markets, meaning that for every person who predicts that an event will take place, there must be another person who predicts that it will not. The site groups related predictions into a market. PredictIt's operating expenses are covered by charging a fee of 10% on earnings in excess of the original investment and by charging an additional 5% withdrawal fee.
Rules and limits
Victoria University of Wellington secured a no-action letter from the Commodity Futures Trading Commission, eliminating the risk of prosecution for illegal online gambling. In order to secure the no-action letter, each question is limited to 5,000 traders, and there is an $850 cap on individual investments per question. These restrictions are modeled after the Iowa Electronic Markets, which previously secured a no-action letter from the Commodity Futures Trading Commission; however, there are differences in the restrictions between the two markets.
Disputes
While the majority of the markets listed have had easily verifiable outcomes, some have not, and disputes have arisen over the wording of some contracts. In December 2018 a dispute arose over the wording of the "Will OPM indicate government shut down at noon on December 24, 2018?" market. The rules specified that the OPM website would need to display "due to a lapse in appropriations, federal government operations vary by agency" at noon on 24 December 2018. While the website had displayed this message a day prior, and the government was indeed shutdown, the message was changed on 24 December 2018 to indicate that the entire government was shutdown for Christmas Eve via executive order. This caused the contract to resolve to no, despite the government being shutdown, which many traders considered against the intent of the market which was to use the OPM website as a proxy for whether the government was shutdown. A significant on-going dispute is whether the "How many Senate seats will the GOP hold after 2018 midterms?" market should resolve to 53 or 52, provided that Rick Scott chooses to swear in on 8 January instead of 3 January. The rules specify "At the beginning of the 116th Congress, the number of U.S. Senators who were elected with a ballot-listed or otherwise identifiable affiliation with, or who have publicly stated an intention to caucus with the Republican Party shall be the number or range identified in the question." The people supporting 52 believe that Rick Scott's seat should not be included, since he won't be a Senator at the beginning of Congress. The people supporting 53 believe that his seat should, since his seat will still be a Republican seat, he was still elected to the U.S. Senate in the 2018 midterms with a Republican affiliation, still intends to caucus and because the senate.gov documentation regarding first day of Congress proceedings consistently uses the word Senator to refer to both senators and senator-elects and makes allowances for senators who miss their swearing in. Other significant disputes in PredictIt's history arose over "Will Trump withdraw from the Paris Agreement in 2017?" which was resolved with exactly half of traders supporting each side, and the "Who will be Senate-confirmed Secretary of State on March 31, 2018?" in which Rex Tillerson was fired by Trump in the middle of the month, but was officially the secretary of state until midnight at the end of the month. The longest running dispute of all occurred during the 2020 Democratic Primary Season. The market 'Who will win the 2020 Iowa Democratic Caucases?' proved controversial after both Pete Buttigieg and Bernie Sanders filed numerous grievances to have various caucuses recounted. Buttigieg was eventually declared the winner of State Delegate Equivalents by the Iowa Democratic Party more than a month after the initial voting took place. However, PredictIt chose to not resolve the market citing that they would keep open until there was no chance of the decision being changed. Remaining traders in the market questioned what criteria would need to occur to satisfy the PredictIt administrators. In the end, the market was only resolved after both Pete Buttigieg and Bernie Sanders had suspended their campaigns.
