Comment Text:
Dear Chairman and Commissioners,
My name is Paul Davis, and Im a finance professional based in California. Im writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I actively trade on regulated prediction markets like Kalshi, and I strongly support the CFTC crafting proportionate regulations for these markets rather than imposing broad restrictions or bans.
As someone who works in finance, I see firsthand how prediction markets provide unique tools for hedging real financial risks. For example, Ive used Kalshi to hedge against potential economic shifts tied to election outcomes and Federal Reserve decisions that could impact my personal investments and business planning. These markets arent just games; theyre practical for individuals and businesses trying to manage uncertainty. Beyond hedging, the price discovery in these markets often outpaces traditional polls or pundits, giving me, and the broader public, better information to make informed decisions.
Im particularly drawn to a few of the CFTCs questions in this ANPR. Regarding Questions 7 and 8 under Public Interest, I believe prediction markets serve a clear public good by aggregating information efficiently and offering a democratized platform for risk management. On Questions 29 and 30 about inside information, Id argue that informed trading actually sharpens price discovery, benefiting all participants, as long as existing laws against insider trading by federal employees are enforced. The CFTC already has robust tools to tackle manipulation and insider trading in other derivatives markets. These can and should be adapted here, as noted in Questions 1 and 2 under Core Principles.
I also want to stress that regulated markets like Kalshi are far safer than unregulated offshore platforms. Banning or over-restricting event contracts would simply push activity to less secure venues, which helps no one. The US has a chance to lead in financial innovation, and we shouldnt cede that to other countries. Im all for oversight, but it needs to be targeted, addressing specific risks without sweeping categorical bans. Questions 33 and 34 on classification and costs touch on this, and I urge the CFTC to prioritize rules that dont burden small entities or stifle innovation.
Ive seen the value of these markets in my own trading, and I believe they can benefit a wide range of Americans if regulated properly. Shutting them down or over-regulating them would be a mistake. Please focus on proportionate rules that keep markets safe and accessible while preserving their unique benefits. Thank you for considering my input.
Sincerely,
Paul Davis
