Comment Text:
Dear Chairman and Commissioners,
My name is Scott Ziegler, and Im a lawyer based in New York. Im writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who actively trades on regulated platforms like Kalshi, I strongly support the development of well-regulated prediction markets in the United States, and I urge the CFTC to adopt a proportionate, targeted approach rather than imposing broad restrictions or bans.
Prediction markets are invaluable to me, both professionally and personally. As a lawyer, I often deal with clients whose businesses are impacted by political and economic uncertainties, such as election outcomes or regulatory shifts. Platforms like Kalshi allow me to gain insights from aggregated market data that are consistently more accurate than polls or pundit predictions. This isnt just useful for my trades; its information that benefits public decision-making and price discovery for everyone. Ive also used these markets to hedge personal financial risks, like potential tax changes tied to election results. This isnt gambling. Its a legitimate economic tool, much like trading futures or options to manage risk.
Im particularly concerned about the notion of classifying event contracts as gaming, as raised in Questions 15-22 of the ANPR. These contracts serve real purposes, like hedging and forecasting, and should not be lumped in with gambling. I also believe that regulated markets are far safer than the alternative. If the CFTC over-restricts or bans these markets, activity will simply move to unregulated offshore platforms, as implied in Questions 7-14 on public interest. Thats a loss for consumer protection and for U.S. competitiveness in financial innovation. We should be leading in this space, not ceding it to other countries.
On the issue of manipulation and insider trading, discussed in Questions 29-32, I want to stress that the CFTC already has robust tools to address these risks. Existing laws and regulations for other derivatives can be adapted here. Informed trading, far from being a problem, actually improves price discovery and benefits all participants. Banning or overly restricting markets to stop a few bad actors punishes law-abiding users like me. Instead, focus on enforcing current rules.
I also support a balanced approach to regulation, as touched on in Questions 1-6 and 33-40. Categorical bans or excessive costs on small entities would stifle innovation. Targeted rules that address specific risks, like manipulation, are the better path.
In short, prediction markets are a powerful tool for forecasting, hedging, and democratizing information. I ask the CFTC to support their growth with fair, proportionate regulation rather than restrictive measures that push activity offshore or limit access. Thank you for considering my perspective.
Sincerely,
Scott Ziegler
