Comment Text:
Dear Chairman and Commissioners,
My name is Marc Pedersen. I am a business owner based in New York, and I advise various businesses and startups on financial, strategic, and operational matters. I am writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, 91 FR 12516, to express my strong support for proportionate, well-regulated prediction markets in the United States.
Prediction markets provide valuable, real-time data regarding events with direct economic consequences. For the businesses I advise, the probability of shifts in tax policy, regulatory developments, or Federal Reserve decisions materially affects strategic planning, capital allocation, and risk management. Unlike speculative entertainment, event contracts serve a legitimate economic function by helping users forecast and hedge exposures tied to macroeconomic and political uncertainty.
I believe it is in the public interest to maintain this activity within the United States under CFTC oversight. Restricting regulated domestic markets will not eliminate demand; rather, it will likely migrate activity to offshore venues with weaker consumer protections and limited surveillance. This shift would diminish the ability of U.S. regulators to monitor for manipulation and insider abuse.
While risks such as trading on nonpublic information must be taken seriously, they are not unique to prediction markets. The CFTC already manages similar risks in other markets through surveillance, position limits, and disclosure obligations. I advocate for a similar risk-based approach here. Targeted regulation and robust supervision are more effective than categorical bans, which risk eliminating useful price discovery and transparency.
In response to specific Commission questions:
- Question 7: Regulated onshore markets strike the best balance between innovation and consumer protection. Overly broad restrictions would likely reduce protection by moving activity to unregulated environments.
- Question 29: Strong monitoring and enforcement are essential to address inside information. The focus should be on distinguishing between lawful informed trading and abusive trading based on improperly obtained information, rather than prohibiting the market entirely.
- Question 33: Event contracts serve a clear economic purpose by providing forecasting signals and hedging tools for those exposed to policy and regulatory uncertainty.
I respectfully urge the Commission to support a proportionate regulatory framework that allows for responsible innovation under appropriate oversight.
Thank you for your time and consideration.
Sincerely,
Marc Pedersen
