Comment Text:
Dear Chairman and Commissioners,
My name is Dallin Larsen, and I'm a software engineer from Utah. I write algorithms for trading in financial markets and have had success with them over the years. I also actively trade on prediction markets like Kalshi, which is why I'm writing to you about the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support well-regulated prediction markets and want to share my perspective as someone who sees their value both professionally and personally.
As a tech professional, I understand the importance of data and accurate information. Prediction markets consistently produce forecasts that beat polls or pundits, aggregating real-world insights in a way nothing else can. I've used these markets to hedge personal risks, like economic policy changes that could impact my income or business costs. This isn't just playing a game; it's a practical tool for managing uncertainty. I also believe that informed trading, which I strive to do through research and analysis, improves price discovery for everyone, not just traders like me.
Im particularly concerned about how event contracts might be classified. To me, trading on prediction markets feels much closer to trading stocks than using a sports betting platform. I'm trading contracts with other participants, not betting against a house where the odds are stacked against me. The market sets the odds, just like in stocks, and it takes skill and judgment to profit. Labeling this as "gaming" would be a misstep. These contracts serve real economic purposes, like hedging and information gathering, and shouldn't be lumped in with gambling.
I also want to stress the importance of regulation over restriction. Regulated platforms like Kalshi are far safer than unregulated offshore alternatives. If the CFTC over-restricts or bans these markets, activity will just move to less transparent venues, putting consumers at greater risk. The CFTC already has strong tools to combat manipulation and insider trading in other derivatives markets. Those can be adapted here without resorting to broad categorical bans. Proportionate, targeted rules make more sense. On a related note, I believe the US should lead in financial innovation. We shouldn't cede this space to other countries by over-regulating.
Regarding specific questions in the ANPR, Id like to address Question 8 under Public Interest, about balancing innovation and consumer protection. Regulation, not prohibition, is the answer. And on Question 15 under Listed Activities, defining "gaming" should exclude event contracts that serve economic purposes like hedging. These aren't bets; they're investments in information.
I hope the CFTC will support prediction markets with fair, balanced rules. Don't ban or over-restrict them. Allow individuals like me the freedom to participate in legal, regulated markets that benefit society through better forecasts and risk management. Thank you for considering my input.
Sincerely,
Dallin Larsen
