Comment Text:
Dear Chairman and Commissioners,
My name is Edward Alexander Martinez Estevez, and I'm a trader and investor based in Massachusetts. I've been involved in various financial markets for years, and I've used prediction markets a few times to inform my decisions and hedge risks. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for well-regulated prediction markets. I believe they offer unique value to individuals like me and to society as a whole, and I urge the CFTC to adopt a balanced, proportionate approach to their regulation.
Prediction markets have provided me with insights I can't get from traditional news or polls. The prices reflect real-time, crowd-sourced information that often proves more accurate than expert opinions. This isn't just useful for traders; it helps everyone, from policymakers to regular citizens, make better-informed decisions. I also see these markets as a tool for democratizing access to financial information. Allowing everyday people like me to participate ensures that valuable data isn't locked away with big institutions. It levels the playing field.
I want to address a few specific concerns I've seen raised. First, I strongly believe event contracts are not gambling. Trading on these platforms requires research, analysis, and judgment about real-world events, much like trading stocks or commodities. Classifying them as "gaming" would be a misstep, as they serve legitimate economic purposes like price discovery and hedging. For instance, I've used prediction markets to gauge potential policy changes that could impact my investments, and that kind of risk management is far from a game.
I'm also concerned about the alternative to regulated markets. Platforms like Kalshi, operating under CFTC oversight, are far safer than unregulated offshore options. If we over-restrict or ban these markets, activity will just move to less transparent, riskier venues. Regulation should protect consumers, not push them into the shadows. On the topic of insider trading or manipulation, I agree it's a valid concern, but the answer isn't broad bans. Informed trading actually improves price discovery, benefiting all participants. Existing laws already prohibit insider trading and market manipulation, and the CFTC has the tools to enforce them. Let's target bad actors, not punish everyone.
I'd like to reference a few of the questions posed in the ANPR. On Question 7, regarding balancing innovation and consumer protection, I believe regulation should encourage innovation while using existing safeguards to protect users. For Questions 15 and 16, about defining gaming versus legitimate markets, I urge the CFTC to recognize the economic utility of event contracts. And on Question 29, about inside information, I think informed traders enhance market accuracy, as long as illegal behavior is policed.
In closing, I ask the CFTC to support proportionate regulation of prediction markets. Don't impose broad restrictions or categorical bans that would stifle their benefits or drive activity offshore. Focus on targeted rules to address specific risks while allowing these valuable tools to thrive.
Sincerely,
Edward Alexander Martinez Estevez
