Comment Text:
Dear Chairman and Commissioners,
My name is Derek McLain, and I'm a business owner from Oregon. I run a small logistics company here, dealing with supply chain uncertainties every day. I'm writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I actively trade on regulated platforms like Kalshi, and I strongly support well-regulated prediction markets. I believe they provide unique value to individuals and businesses like mine, and I urge the CFTC to craft rules that allow these markets to thrive without over-restricting or banning them.
For me, prediction markets aren't just a hobby. They're a tool. I use them to hedge risks that directly impact my business, like potential changes in trade policies or economic indicators such as inflation reports that affect shipping costs. Just last year, I was able to offset some financial uncertainty around a possible tariff hike by trading event contracts tied to policy outcomes. This isn't gambling; it's a practical way to manage real-world risks, much like how I use traditional markets to hedge fuel costs. Plus, the forecasts from these markets are often more accurate than anything I hear from polls or pundits. That kind of information helps me plan better, and it's valuable to society as a whole, not just traders.
I also value the freedom to participate in legal, regulated markets. Platforms like Kalshi, under CFTC oversight, are transparent and safe. If you ban or overly restrict these markets, people like me won't just stop trading. We'll get pushed to unregulated offshore platforms with no protections. I've seen what happens in industries where regulation chokes innovation; the activity doesn't disappear, it just goes underground. The U.S. should be leading in financial innovation, not handing the advantage to other countries by driving markets away.
On some of the specific questions in the ANPR, I want to address Question 8 under Public Interest. Prediction markets absolutely serve the public good through price discovery and risk management. They shouldn't be lumped in as "gaming" under Question 15. Trading these contracts takes research and judgment, just like any other investment. Classifying them as gaming ignores their legitimate economic purpose, like hedging or aggregating information. And on Question 29 about inside information, I believe the CFTC's existing tools to combat manipulation and insider trading are enough. Don't punish everyone by shutting down markets over the actions of a few bad actors.
I understand concerns about manipulation or misuse, but the answer isn't to ban these markets. It's to enforce the laws already in place and focus on proportionate rules. I'm asking the CFTC to support regulated prediction markets with fair, targeted regulations that address specific risks without stifling innovation or access. Let's keep these markets safe, accessible, and American-led.
Thank you for considering my input.
Sincerely,
Derek McLain
