Comment Text:
Dear Chairman and Commissioners,
My name is Caden Davis, and I'm a trader and investor from Texas. I run a small business that relies on hourly crypto predictions through Kalshi, and I actively trade on prediction markets like Kalshi and Polymarket. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for proportionate regulation of these markets. I believe they provide real value to people like me, and I urge you not to ban or over-restrict them.
Prediction markets aren't just a hobby for me. They're a tool I use to hedge real financial risks for my small business. For instance, I trade on crypto-related event contracts to offset potential losses from sudden market swings that could impact my operations. This isn't gambling. It's a calculated decision based on research and judgment, much like any other investment I make in stocks or commodities. Classifying event contracts as "gaming" ignores the legitimate economic purpose they serve, like hedging and price discovery. I think the CFTC should recognize this distinction when considering how to regulate under questions 15 to 22 about listed activities.
I also believe that informed trading makes these markets better for everyone. When people with real knowledge trade, the prices reflect more accurate information, which helps me make smarter decisions for my business. Banning or limiting these markets because of concerns about insider trading or manipulation doesn't solve the problem. It just pushes activity to unregulated offshore platforms where there's no oversight at all. I'd much rather trade on a regulated market like Kalshi, where I know the CFTC is watching for bad actors. As you address questions 29 to 32 on inside information, I hope you'll consider that the CFTC already has strong tools to prevent manipulation and insider trading in other derivatives markets. Those can work here too.
I'm worried that over-restricting prediction markets will hurt small traders like me while big institutions find ways around the rules. If the U.S. clamps down too hard, we'll just see more activity move to less safe, offshore venues. That doesn't protect anyone. Regulated markets are the better path. They're transparent, accountable, and give regular folks like me a fair shot at using these tools to manage risk.
I appreciate the CFTC taking the time to ask for input on this. Prediction markets have real benefits for individuals and businesses trying to navigate uncertainty. I urge you to craft rules that address specific risks without shutting down the whole industry. Focus on enforcing the laws you already have against manipulation and insider trading, and keep these markets accessible and regulated here in the U.S.
Thank you for considering my perspective.
Sincerely,
Caden Davis
