Comment Text:
Dear Chairman and Commissioners,
My name is Andrew Smith, and I'm a trader and investor based in South Carolina. I've been actively trading on prediction markets like Kalshi for a while now, and I wanted to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I strongly support the idea of well-regulated prediction markets, and I hope my perspective as someone who participates in these markets can help inform your approach.
I rely on prediction markets for information that I simply can't get anywhere else. I've seen firsthand how their forecasts often beat out polls or pundits when it comes to predicting election outcomes or economic indicators. That kind of accuracy isn't just helpful for traders like me; it benefits the public, the media, and even policymakers who need reliable data to make decisions. Plus, trading on these platforms isn't some game of chance. It takes research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" feels wrong to me because they serve real economic purposes, like price discovery and hedging against uncertainty.
I also believe that regulated markets like Kalshi are far safer than the alternative. If the CFTC over-restricts or bans these markets, people like me won't just stop trading. We'll get pushed to unregulated offshore platforms where there's no oversight at all. I'd much rather participate in a market under the CFTC's watch, where there are already strong tools in place to prevent manipulation and insider trading. You don't need to reinvent the wheel here; just use what works for other derivatives and apply it to event contracts.
On the topic of informed trading, I think it actually helps everyone. When people with good information trade, it makes the prices more accurate, which benefits all market participants. I'm not saying bad actors should get a free pass, but the answer isn't to shut down the whole market. Proportionate, targeted rules make more sense than broad bans. Id like to point specifically to Questions 7 and 8 in the ANPR about balancing innovation with consumer protection, and Question 29 on whether informed traders help price discovery. My view is clear: innovation and accuracy should be prioritized, and informed trading is a net positive if paired with strong enforcement against abuse.
There's also solid academic research backing this up. Studies by economists show prediction markets aggregate information efficiently, and I think the CFTC should lean on that data when crafting rules. Transparency in how these markets operate only strengthens public trust.
I urge you to support proportionate regulation of prediction markets. Don't ban or over-restrict them. Let's keep these markets accessible, safe, and useful for everyday traders like me, while addressing specific risks with the tools you already have. Thank you for considering my input.
Sincerely,
Andrew Smith
