Comment Text:
Dear Chairman and Commissioners,
My name is Alexis Lorenzo, and I'm a student based in California. I'm writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone studying academic research and public policy, I've developed a strong interest in how prediction markets can provide valuable data and tools for individuals and society. I've also used prediction markets a few times myself, and I believe they have real benefits that deserve thoughtful, proportionate regulation rather than heavy-handed restrictions.
I support well-regulated prediction markets for a few key reasons. First, they produce forecasts that are often more accurate than polls or pundits. I've seen this firsthand during election cycles, where platforms like these cut through the noise of opinion pieces and give a clearer picture of likely outcomes. This isn't just helpful for people trading; it's useful for anyone trying to understand what's happening in the world, from students like me to journalists and even policymakers. Second, these markets let individuals and businesses hedge real financial risks. For example, a small business owner might use a contract on an election outcome to offset uncertainty around tax policy changes, or someone like me could hedge against economic shifts tied to public events. This isn't gambling; it's a practical tool for managing uncertainty.
I also value the freedom to participate in legal, regulated markets. Banning or over-restricting these platforms would push activity to offshore, unregulated sites, which helps no one. Keeping them under CFTC oversight ensures transparency and fairness. As a student, I appreciate how these markets democratize access to information and financial tools. They aren't just for big institutions; regular people can engage too, and that inclusivity makes the data and forecasts stronger.
I'm aware of concerns about manipulation or insider trading, and I take those seriously. But I believe the CFTC already has robust tools to address these issues. Your existing authority over market manipulation and fraud, combined with laws that bar federal employees from trading on nonpublic information, provides a solid foundation. Shutting down or severely limiting prediction markets to stop a few bad actors seems like punishing everyone for the actions of a few. Instead, I urge you to focus on targeted rules that address specific risks without stifling innovation.
On a related note, I'd like to respond to some of the questions in the ANPR. Regarding Questions 7 and 8 under Public Interest, I believe prediction markets serve the public good by improving price discovery and risk management. And on Question 29 under Inside Information, I think informed traders often enhance price accuracy, as long as existing laws against insider trading are enforced.
As someone invested in academic research, I also see immense value in the transparent data these markets generate. I hope the CFTC will support proportionate regulation that allows prediction markets to thrive while addressing legitimate risks with the tools already at your disposal. Thank you for considering my perspective.
Sincerely,
Alexis Lorenzo
