Comment Text:
Dear Chairman and Commissioners,
My name is Alex Franco, and I'm a student from New Mexico with a strong interest in academic research and data transparency. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who actively trades on platforms like Kalshi and Polymarket, I want to express my support for well-regulated prediction markets. I believe they provide unique value to society and to individuals like me, and I urge the CFTC to adopt proportionate regulations rather than overly restrictive rules or outright bans.
Prediction markets aren't just a hobby for me; they're a tool for understanding the world. As a student, I rely on the data and insights these markets provide to study trends in elections and other public events. I've found their forecasts to be more accurate than traditional polls or pundits, which is invaluable for research. Beyond that, these markets allow people and businesses to hedge real risks. For example, a small business owner might use them to protect against policy changes tied to an election outcome, just as I might consider how economic events affect my future as a student. This isn't gambling. It takes research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" ignores their legitimate economic purpose, and I hope the CFTC will recognize this distinction when addressing Questions 15-22 on listed activities.
I'm also concerned about the risk of over-regulation. Banning or heavily restricting prediction markets won't stop them; it will just push activity to unregulated offshore platforms, which are far less safe. The CFTC already has strong tools to prevent manipulation and insider trading in other derivatives markets. These can be adapted for event contracts without resorting to broad prohibitions. I think the US should be a leader in financial innovation, not cede ground to other countries. This ties into Questions 7-14 on public interest, where I believe innovation and consumer protection can be balanced with smart rules.
I understand there are concerns about manipulation or misuse, but shutting down these markets punishes everyone for the actions of a few. Instead, focus on enforcing existing laws and creating targeted safeguards. I urge you to consider the academic evidence supporting prediction markets as tools for accurate forecasting and information aggregation, especially for public events like elections.
In closing, I ask the CFTC to support proportionate regulation of prediction markets. Allow platforms like Kalshi to operate under clear, fair rules that protect participants while preserving the benefits these markets offer. Thank you for considering my perspective as a student who sees the real value in this space.
Sincerely,
Alex Franco
