Comment Text:
Dear Commissioners,
I am writing to express strong support for the continued development and onshore operation of prediction markets in the United States. As financial infrastructure evolves, prediction markets represent a natural extension of market based information discovery, one with meaningful implications for research, risk management, and capital allocation.
Prediction markets aggregate dispersed information into a single probabilistic signal. In doing so, they often outperform traditional forecasting methods, particularly in complex or uncertain environments. For research driven organizations, these markets can serve as a complementary data layer, enhancing fundamental analysis with real time, incentive aligned expectations.
More importantly, prediction markets should be understood not in isolation, but as part of a broader historical pattern: financial innovation begets further innovation.
Throughout modern economic history, foundational financial infrastructure has unlocked entirely new categories of economic activity:
The development of public equity markets enabled the scaling of industrial and technological enterprises.
The rise of venture capital catalyzed the commercialization of emerging technologies, from semiconductors to the internet.
Derivatives markets improved risk transfer, supporting global trade, commodity production, and institutional portfolio management.
More recently, digital asset infrastructure has accelerated experimentation in decentralized finance and programmable capital.
Prediction markets fit squarely within this lineage. By enabling the pricing of future events across economics, geopolitics, technology adoption, and beyond, they create a new layer of financial primitives that can be used for:
Risk management and hedging: Institutions can hedge exposure to policy outcomes, supply chain disruptions, or macroeconomic scenarios.
Improved capital allocation: Market implied probabilities can inform investment decisions, particularly in frontier and emerging technologies.
Enhanced research processes: Prediction signals can augment traditional models, reducing bias and improving forecast accuracy.
New financial products: Over time, prediction based instruments could evolve into a broad asset class, supporting liquidity, trading, and structured products.
As capital markets evolve, we also believe the long standing shift toward passive strategies may begin to reverse at the margin. As dispersion across companies and technologies increases, active managers will play a larger role in price discovery and capital allocation. In this context, prediction markets can provide a valuable informational edge, helping investors differentiate between winners and losers in increasingly complex innovation cycles. By improving the quality of signals available to active managers, prediction markets can support more efficient allocation of capital toward high impact, innovative companies.
ARK Invest’s research suggests that prediction markets could evolve into a multi trillion dollar asset class as participation broadens and use cases expand. This growth is not speculative; it reflects the increasing value of high quality, real time information in a complex, rapidly changing global economy.
Critically, the United States has a strategic opportunity to lead in this domain. Restrictive or unclear regulatory frameworks risk pushing innovation offshore, where it will continue to develop without U.S. oversight, participation, or economic benefit. By contrast, a thoughtful regulatory approach can ensure that prediction markets develop responsibly within U.S. jurisdiction, benefiting from transparency, investor protections, and institutional engagement.
Stifling innovation at this stage would not eliminate the demand for these markets, it would simply relocate them. History suggests that when foundational financial technologies are constrained domestically, both talent and capital follow opportunity elsewhere.
We believe the CFTC has an important role to play in fostering a regulatory environment that balances innovation with appropriate safeguards. Done correctly, this framework can support the emergence of prediction markets as a valuable tool for research, risk management, and economic decision making.
Thank you for your consideration and for the opportunity to provide input during this rulemaking process.
Sincerely,
- Cathie Wood
