Comment Text:
Dear Chairman and Commissioners,
My name is David Frid, and I'm a trader and investor based in New York. I've been actively trading on prediction markets like Kalshi for a while now, and Im writing to share my support for well-regulated prediction markets in response to your Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets provide unique value to individuals like me, as well as to society at large, and I urge you to craft rules that encourage innovation while addressing real risks with targeted solutions.
As a trader, Ive seen firsthand how prediction markets offer information you cant get anywhere else. Their forecasts on elections and public events consistently beat polls and pundits. Ive used these insights to make better decisions, not just in trading but in understanding the world around me. This isnt just about personal gain. When prices reflect accurate probabilities, everyone benefits, from regular folks to policymakers who can use this data for better decision-making. I also use these markets to hedge personal financial risks, like potential policy changes that could impact my investments. This isnt gambling. Its research, judgment, and strategy, much like trading stocks or commodities.
Im also a firm believer that regulated markets like Kalshi are far safer than the unregulated offshore platforms out there. If the CFTC over-restricts or bans these markets, activity will just move to less transparent, riskier venues. The US has a chance to lead in financial innovation here. We shouldnt cede that ground to other countries by stifling a growing industry. Regulation is important, but it needs to be proportionate. Broad categorical bans punish everyone for the potential actions of a few bad actors. Instead, target specific issues like manipulation or insider trading with the tools you already have.
Regarding some of your specific questions, Id like to address Question 11 under Public Interest, about balancing innovation and consumer protection. I think regulated prediction markets strike that balance by giving everyday people access to valuable information while operating under CFTC oversight. On Question 29 under Inside Information, I believe informed trading actually improves price discovery. It makes the markets predictions more accurate, which helps everyone. Existing laws already prohibit insider trading by federal officials, so the focus should be enforcement, not shutting down entire markets.
Im not blind to the risks. Manipulation and unfair practices are real concerns, but the CFTC already has authority to tackle those in other derivatives markets. Adapt those safeguards here. Dont throw out a useful tool just because its not perfect. Prediction markets arent gambling. They serve real economic purposes, from hedging to price discovery, and academic research backs up their value in aggregating information.
I respectfully ask that you support proportionate regulation of prediction markets. Encourage their growth under a clear, fair framework, and avoid overly restrictive rules or outright bans that would harm innovation and push activity offshore. Thank you for considering my input.
Sincerely,
David Frid
