Comment Text:
Dear Chairman and Commissioners,
My name is Jo Babcock, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi and Polymarket for a while now, and I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support the idea of well-regulated prediction markets, and I want to share why I think the CFTC should encourage their growth with proportionate rules, not bans or heavy restrictions.
As someone who trades regularly, I can tell you prediction markets are a unique tool. They provide information you just can't find elsewhere. I've seen firsthand how their forecasts often beat out polls or pundit opinions when it comes to accuracy. Whether it's an election outcome or an economic indicator, these markets aggregate what people really think, based on where they put their money. This isn't just helpful for traders like me; it's valuable for the public, for journalists, and even for policymakers who need reliable signals to make decisions. I believe fostering these markets, as raised in Questions 7 and 8 about public interest and price discovery, would be a net positive for society.
I also care deeply about the freedom to participate in legal, regulated markets. Platforms like Kalshi, which operate under CFTC oversight, are far safer than unregulated offshore alternatives like Polymarket often has to be for certain contracts. If the CFTC over-restricts or bans event contracts, it won't stop trading; itll just push people like me to less safe venues with no oversight. Thats a worse outcome for everyone. On this point, I think Question 34 about regulatory costs and impacts is critical. The US should be leading in financial innovation, not handing that advantage to other countries by driving activity offshore.
Another thing I want to stress is that event contracts aren't gambling. I spend hours researching data, reading news, and analyzing trends before making trades. That's not a game of chance; it's a skill, much like trading stocks or commodities. These contracts serve real economic purposes, like hedging risks tied to elections or policy changes that affect my investments. Classifying them as "gaming," as discussed in Questions 15 and 16, misses their true value. Plus, informed trading by knowledgeable participants actually improves price discovery, benefiting everyone in the market, not just the traders.
Finally, I'm confident the CFTC already has the tools to handle issues like manipulation or insider trading. These are illegal in any market, and the existing rules can be applied here without needing sweeping bans. Shutting down prediction markets to stop a few bad actors makes no sense when you can target the actual problems directly, a point I think ties into Questions 29 and 30 about inside information.
I urge the CFTC to support proportionate regulation that allows prediction markets to thrive under clear, fair rules. Don't let over-restriction push this innovative space offshore or out of reach for everyday traders like me. Thank you for considering my perspective.
Sincerely,
Jo Babcock
