Comment Text:
Dear Chairman and Commissioners,
My name is Jonathan Williams, and I'm an entrepreneur and active trader based in South Carolina. I'm writing to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I've been trading on platforms like Kalshi for a while now, and I strongly support well-regulated prediction markets. They aren't just a hobby for me; they're a tool I use to make informed decisions for my business and investments.
As someone who runs a small business, I see prediction markets as a unique source of information. They often provide better insights than polls or expert opinions, especially when it comes to economic or political events that could impact my operations. For instance, trading on election outcomes or policy decisions helps me gauge risks that might affect my supply chain or taxes. This isn't gambling; it's 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 hedging and price discovery. I put time into understanding the data and trends before placing a trade, just as I would with any investment.
I'm also impressed by the academic research behind prediction markets. Studies I've read, from economists like Hanson and Wolfers, show these markets aggregate information efficiently, often outperforming traditional forecasting methods. That transparency and accuracy benefit not just traders like me, but the broader public and even policymakers who can use this data to understand public sentiment. It's frustrating to think something so useful could be mislabeled or over-restricted.
I want to address a concern I know the CFTC has, especially around manipulation or insider trading as mentioned in Questions 29 to 32 of the ANPR. I get why this is a worry, but banning or heavily restricting these markets isn't the answer. The CFTC already has tools to tackle manipulation and insider trading in other derivatives markets. Those same tools can work here. Plus, laws already prohibit federal employees from trading on nonpublic info. Punishing everyone by shutting down prediction markets because of a few bad actors feels unfair, like closing the stock market over insider trading scandals.
On Questions 15 to 22 about defining gaming versus legitimate markets, I urge you to recognize that event contracts aren't about luck or chance. They're about informed decision-making. They help me hedge real risks, like policy changes that could hit my bottom line. Treating them as gambling would ignore their economic value.
I ask the CFTC to support proportionate regulation that allows prediction markets to thrive while addressing specific risks with targeted rules. Don't ban or over-restrict them. These markets are too valuable for entrepreneurs like me, and for society as a whole, to lose.
Thank you for considering my input.
Sincerely,
Jonathan Williams
