Comment Text:
Dear Chairman and Commissioners,
I am writing to express my strong support for the proportionate regulation of prediction markets in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I have used prediction markets myself, and I believe they offer unique value that deserves thoughtful oversight rather than heavy-handed restrictions.
As an active market participant, I rely on accurate data to make informed decisions. Prediction markets have consistently provided insights that polls and pundits often miss, especially on elections and major public events. Their ability to aggregate information from a wide range of participants produces forecasts that I trust more than traditional sources. This isn't just useful for me; it benefits society by giving everyone access to better information. Beyond forecasting, these markets also allow individuals to hedge real financial risks. For example, I have used them to offset uncertainties tied to policy changes that could impact my personal investments. This hedging function isn't gambling; it is a practical tool, much like other derivative markets.
I also want to stress that regulated platforms, like Kalshi, are far safer than unregulated offshore alternatives. If the CFTC over-restricts or bans these markets, the activity won't stopit will just move to less transparent, riskier venues where consumer protections are nonexistent. Regulation keeps participants safe and ensures accountability. I am aware of concerns about manipulation or insider trading, but I believe the CFTC already has powerful tools to address these issues. Punishing the entire market for the actions of a few bad actors makes no sense when targeted enforcement can handle the problem.
I am particularly interested in a few of the questions posed in the ANPR. On Question 7, regarding balancing innovation and consumer protection, I urge you to prioritize regulation that fosters trust without stifling the benefits of these markets. For Questions 15 and 16, about defining legitimate activities, I believe event contracts tied to economic or policy outcomes should be recognized as valid tools for hedging and price discovery, distinct from gaming. Finally, I am encouraged by academic research, like studies from economists such as Wolfers and Zitzewitz, showing how prediction markets improve information transparencya point relevant to Question 33 on classification and benefits.
I ask that the CFTC adopt a balanced approach to regulating prediction markets. Please support their growth as a valuable financial tool while addressing specific risks with targeted rules. Do not let overregulation push this innovation offshore or out of reach for everyday participants.
Thank you for considering my input.
Sincerely,
Sante Bambocci
