Comment Text:
Dear Chairman and Commissioners,
My name is Arthur Colle, and I'm a market maker based in Maryland with years of experience in weather derivatives trading. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for well-regulated prediction markets. As someone who relies on these tools for hedging and risk management, I believe they provide immense value to individuals, businesses, and society as a whole.
In my work with weather derivatives, I've seen firsthand how prediction markets can offer critical insights and help manage financial risks. I use these markets to hedge against uncertainties that impact my trading strategies, and I've found their forecasts for public events, like elections, to be far more accurate than polls or pundits. This isn't just useful for me; it benefits everyone by providing better information for decision-making. Price discovery in these markets helps the public and policymakers alike, and I think that's something worth protecting.
I also want to stress that event contracts are not gambling. They serve real economic purposes, like hedging risks for businesses and individuals. For example, I've used prediction markets to offset potential losses tied to policy changes or economic shifts. Calling this "gaming" would be like calling any derivative trading gaming, which I firmly believe is wrong. Derivatives aren't bad; they're good. They help manage risk and bring clarity to uncertain outcomes.
On the topic of regulation, I appreciate the CFTC's focus on consumer protection, but I urge you to pursue proportionate, targeted rules rather than broad bans. The CFTC already has strong tools to combat manipulation and insider trading in other derivatives markets. Those same tools can work here. Banning or over-restricting prediction markets won't eliminate bad actors; it will just push activity to unregulated offshore platforms, which are far less safe than regulated markets like Kalshi. Addressing Questions 7 and 29 from the ANPR, I believe regulated markets balance innovation with protection and that informed trading actually improves price discovery, benefiting all participants.
Finally, the US should be a leader in financial innovation. If we over-regulate or ban these markets, we risk ceding ground to other countries. Let's keep this activity here, under proper oversight. Academic research supports the value of prediction markets for aggregating information, and I hope the CFTC considers this data when crafting rules.
I urge you to support proportionate regulation of prediction markets that addresses specific risks without stifling their benefits. Thank you for considering my perspective as someone who relies on these tools every day.
Sincerely,
Arthur Colle
