Comment Text:
Dear Chairman and Commissioners,
My name is Peter Kapp, and I'm a finance professional from Pennsylvania. I'm writing to express my strong support for the proportionate regulation of prediction markets in response to your Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I've used prediction markets a few times myself, and I believe they offer unique value both to individuals like me and to society at large.
As someone who works in finance, I see prediction markets as a powerful tool for generating information thats often more accurate than polls or pundits. I've relied on their forecasts to better understand economic and political trends that impact my work and personal finances. This isn't just about traders; the data these markets produce helps everyone, from policymakers to everyday citizens, make better decisions. Beyond that, I value the freedom to participate in legal, regulated markets like Kalshi. These platforms are far safer than unregulated offshore alternatives, and banning or over-restricting them would only push activity into less transparent spaces, which helps no one.
I also use prediction markets to hedge real financial risks. For instance, I've placed trades to offset potential impacts of policy changes or election outcomes on my investments and business dealings. This isn't gambling; it's a practical way to manage uncertainty, much like traditional futures or options. Im convinced the U.S. should lead in financial innovation here, not cede ground to other countries. Academic research backs this up, showing how prediction markets improve price discovery and aggregate information efficiently. Informed trading, in my view, benefits everyone by making prices more accurate.
Id like to address a concern I know the CFTC has, especially around insider trading or manipulation, as raised in questions 29-32 of your ANPR. I believe its moral to align financial interests with positive outcomes, even if someone has influence over those outcomes. However, cheating by betting on negative results you can directly cause is wrong and should be tightly regulated. The CFTC already has tools to punish bad actors, and I urge you to focus on targeted rules rather than broad bans. Proportionate regulation can make this a force for good without punishing honest participants.
On questions 7-14 regarding public interest, I ask you to balance innovation with consumer protection by supporting regulated markets that democratize access to information and hedging tools. Dont let the fear of a few bad apples spoil a system with so much potential.
Thank you for considering my input. I strongly encourage the CFTC to adopt a regulatory framework that supports prediction markets while addressing specific risks with precision, not prohibition.
Sincerely,
Peter Kapp
