Comment Text:
Dear Chairman and Commissioners,
My name is Paul Davis, and Im a finance professional based in Utah. Ive spent years in the financial services industry, witnessing firsthand the devastation that gambling can cause when people disguise it as "investing." Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516).
Ive used prediction markets to get accurate probabilities for public events like elections. They aggregate information from a wide range of people, producing insights that are often sharper than what youd get from traditional sources. As someone in finance, I appreciate having access to data thats often more reliable than whats out there in the media.
But lets be honest. While I support these markets, Im deeply worried about how theyre used and presented. Most people on platforms like Kalshi arent hedging risks, despite what some claim. Id guess less than 1% of users are genuinely hedging something like election outcomes affecting their business. The vast majority are gambling, plain and simple. Ive seen gambling destroy lives, families, and futures in my line of work, and its heartbreaking. Calling this activity "investing" or part of a "portfolio" is misleading and dangerous. It gives people an excuse to treat reckless betting as something responsible. I also worry about platforms being designed to hook users, encouraging addictive behavior with constant notifications or gamified features. Thats not right.
Addressing some of your specific questions, like those in Topic Area B on public interest (Questions 7-14), I believe the CFTC needs to balance the forecasting benefits of prediction markets with real consumer protections. These markets are gambling for most people. On Topic Area C regarding listed activities (Questions 15-22), I urge you to define "gambling" narrowly and regulate it more strictly.
As for insider trading and manipulation concerns raised in Topic Area E (Questions 29-32), this needs to be better regulated. People, especially political leaders, should not be able to benefit monetarily with insider information.
I ask the CFTC to support better regulation of prediction markets. Keep the forecasting value alive, and set strict rules on how these platforms operate and market themselves to prevent gambling under a different name. Protect the public while preserving the benefits.
Sincerely,
Paul Davis
