Comment Text:
Dear Chairman and Commissioners,
My name is Jiaqi Chen, and I'm a trader and investor based in California. I'm writing to express my strong support for the proportionate regulation of prediction markets as outlined in the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I've been actively trading on platforms like Kalshi, and I believe these markets provide unique value to individuals like me, as well as to the broader economy.
Prediction markets aren't just a niche hobby for me. They offer critical tools for hedging real financial risks that affect my investments and personal finances. For example, I've used event contracts to offset potential losses tied to election outcomes that could impact tax policies or market regulations. This isn't gambling. It's a calculated decision based on research and analysis, much like trading stocks or futures. These markets also provide forecasting data on elections and public events that I can't find anywhere else. I've seen firsthand how their predictions often outpace traditional polls in accuracy, which helps me make better-informed decisions, and I believe this information benefits society as a whole by improving price discovery.
I also value the freedom to participate in legal, regulated markets. Platforms like Kalshi, operating under CFTC oversight, give me confidence that there's transparency and accountability. Without regulation, activity could shift to offshore, unregulated sites with no consumer protections. Keeping these markets in the U.S. not only protects participants but also ensures America remains a leader in financial innovation. I worry that overly restrictive rules could push this industry abroad, costing us jobs and cutting-edge ideas.
Addressing some of your specific questions, like those in Topic Area B on public interest (Questions 7-14), I believe prediction markets strike a balance between innovation and consumer protection when regulated properly. They aren't just speculative; they serve real economic purposes like hedging and information aggregation, supported by academic research from economists like Hanson and Wolfers. On Topic Area E regarding inside information (Questions 29-32), I understand the concern about manipulation or insider trading. But the CFTC already has strong tools to combat these issues in other derivative markets. Rather than broad bans, I urge you to adapt these existing safeguards to event contracts. Shutting down markets to stop a few bad actors would hurt honest participants like me.
In closing, I ask the CFTC to support well-regulated prediction markets with targeted rules that address specific risks without stifling their benefits. These markets democratize access to information, help hedge real risks, and keep the U.S. competitive. Please don't over-restrict or ban them.
Sincerely,
Jiaqi Chen
