Comment Text:
Dear Chairman and Commissioners,
My name is Joseph Yanez, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi and Polymarket for a while now, and I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I strongly support the development of well-regulated prediction markets, and I want to share my perspective as someone who uses these platforms regularly.
For me, prediction markets aren't just a hobby or a game. They're a tool that provides unique insights I can't get anywhere else. The prices on these markets often predict outcomes more accurately than polls or pundits, whether it's about elections, economic data, or other major events. I've used this information to make better decisions, not just in trading but in understanding the world around me. What's more, these markets let everyday people like me participate in a space that would otherwise be dominated by big institutions. That's a good thing, not something to restrict.
I want to address a specific concern I've seen raised, which relates to Questions 15 through 22 in the ANPR about defining "gaming" versus legitimate markets. I firmly believe event contracts are not gambling. Trading on prediction markets requires research, analysis, and judgment about real-world events, much like trading stocks or commodities. I've spent hours reading up on policy proposals, economic indicators, and historical trends to inform my trades. That's not a roll of the dice; it's a skill. Classifying these contracts as "gaming" would be like calling all investing gambling, and it would ignore the real economic purposes they serve, like price discovery and hedging. For example, I've used event contracts to hedge against potential policy changes that could impact my investments. That kind of risk management is valuable, and it's a far cry from a casino bet.
I also recognize concerns about things like insider trading or manipulation, as mentioned in Questions 29 to 32. But banning or over-restricting prediction markets isn't the answer. Laws already exist to prohibit insider trading by federal employees and others with nonpublic information. The CFTC already has tools to tackle market manipulation in other derivatives markets. Use those tools, don't punish the rest of us by shutting down a useful platform. It's worth noting that regulated markets like Kalshi are safer than unregulated offshore ones. Pushing activity overseas by over-regulating here would just make things worse.
I'm asking the CFTC to support proportionate regulation of prediction markets. Focus on specific risks with targeted rules, not broad bans or classifications that misrepresent what these markets are. Let's keep the U.S. as a leader in financial innovation while protecting consumers. Thank you for considering my input.
Sincerely,
Joseph Yanez
