Comment Text:
Dear Chairman and Commissioners,
My name is Rafa Lorenzana, and I'm a student based in New York. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who actively trades on platforms like Kalshi and Polymarket, I want to express my strong support for well-regulated prediction markets. I believe they provide unique value to individuals like me, as well as to society at large, and I urge the CFTC to craft rules that encourage participation while addressing valid concerns.
Prediction markets aren't just a hobby for me; they're a tool to engage with the world in a meaningful way. As a student, I spend a lot of time researching and analyzing current events and economic trends for my studies. Trading on these platforms lets me test my understanding of complex issues, whether it's an election outcome or an economic indicator like inflation. The prices on these markets often reveal insights that I can't find in news articles or polls. This isn't gambling, in my view. It takes real effort and judgment, much like investing in stocks. I think labeling event contracts as "gaming" (as discussed in Questions 15-22) misses their economic purpose, like price discovery and risk management.
I'm also a big believer in the freedom to participate in legal, regulated markets. Platforms like Kalshi, which operate under CFTC oversight, offer a safe and transparent space for people like me to trade. I've tried unregulated offshore platforms, and the difference is night and day. Without regulation, there's no accountability if something goes wrong. Banning or over-restricting prediction markets in the US would just push activity to those less safe venues. I think the CFTC should focus on strengthening regulated markets instead, as hinted at in Questions 7-14 about balancing innovation and consumer protection.
Another point I care about is the hedging utility these markets provide. I've used them to offset personal risks, like betting on election outcomes that could affect policies impacting student loans or taxes. If businesses and individuals can hedge against political or economic uncertainty, that's a real benefit. Plus, when informed traders participate, it improves price accuracy for everyone. I know there are worries about insider trading (Questions 29-32), but I believe existing laws already cover that. Punishing everyone by restricting markets doesn't seem fair when the CFTC can target bad actors with current tools.
Finally, as someone in academia, I value the data transparency prediction markets offer. The aggregated forecasts are a goldmine for research, often outperforming traditional polling. This public good shouldn't be stifled by overly broad restrictions.
I respectfully ask the CFTC to support proportionate regulation of prediction markets. Please don't impose categorical bans or rules so strict they effectively shut down these platforms. Focus on targeted solutions for manipulation or insider trading, and let students, researchers, and everyday people continue to benefit from these innovative markets.
Sincerely,
Rafa Lorenzana
