Comment Text:
Dear Chairman and Commissioners,
My name is Joshua Jarrott, and Im an ordinary citizen from Pennsylvania writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. Im not a finance expert or a lawyer, just someone whos found a passion in trading on prediction markets like Kalshi. Ive even started building trading bots as a hobby, which has taught me a ton about finance, risk management, math, and programming. Im excited to share why I believe the CFTC should support well-regulated prediction markets with proportionate rules, not broad bans or over-restrictions.
For me, prediction markets arent just a hobby, theyre a source of unique information. Ive seen firsthand how platforms like Kalshi produce forecasts on elections and public events that often beat polls or pundits. That kind of insight helps everyone, not just traders like me. Its also been amazing to have access to a financial tool that used to be locked away for big institutions. Kalshis regulated setup lets regular people like me participate in a democratized market, and I think thats a feature worth protecting. Im worried that over-regulating platforms like this will push folks to offshore sites like Polymarket, which arent nearly as safe or accountable. If the US doesnt lead on financial innovation, Americans will just find ways to trade elsewhere, whether through VPNs or other means. We should be setting the standard, not ceding ground to other countries.
I also want to push back on the idea that event contracts are gambling. Trading on Kalshi takes research and real-world judgment, just like investing in stocks. These markets serve legitimate purposes, like price discovery and even hedging against uncertainty. Informed traders actually make prices more accurate, which benefits everyone. The CFTC already has strong tools to handle manipulation and insider trading in other markets. I believe those can be adapted here without resorting to heavy-handed restrictions. Ive read about academic research backing this up, showing how prediction markets aggregate information efficiently. Thats a public good we shouldnt stifle.
Addressing some of your specific questions, like those in Topic Area B (Questions 7-14) on public interest, I think the balance should favor innovation with targeted safeguards. For Topic Area C (Questions 15-22) on listed activities, Im sympathetic to limits on certain contract types, like those tied to US military operations or specific individuals deaths. These raise real national security and ethical concerns, since accurate market prices could be exploited by adversaries or create perverse incentives. But any such rules should be narrow, clear, and specific, not broad categorical bans that could creep over time or be misused.
In closing, I urge the CFTC to support proportionate regulation of prediction markets. Dont ban or over-restrict platforms like Kalshi that give ordinary citizens a fair shot and provide valuable information. Focus on targeted rules for specific risks instead. Thank you for considering my input.
Sincerely,
Joshua Jarrott
