Comment Text:
Dear Chairman and Commissioners,
My name is Karl Rein, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi for a while now, and Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support the development of well-regulated prediction markets in the United States, and I want to share why I believe theyre valuable and why the CFTC should focus on proportionate regulation rather than overly restrictive rules or outright bans.
As a trader, I rely on prediction markets for unique information that I cant get from polls or pundits. The prices on platforms like Kalshi often give a clearer picture of whats likely to happen with elections or other major public events. This isnt just helpful for me; its valuable for anyone trying to make informed decisions, whether theyre trading or not. Beyond forecasting, these markets let me hedge real financial risks. For instance, Ive used them to offset potential impacts from policy changes or economic events that could affect my investments or personal finances. This isnt gambling. Its a legitimate tool for managing uncertainty, much like trading futures or options.
Im also concerned about access and fairness. Prediction markets let regular people like me participate in a space that would otherwise be dominated by big institutions. If we over-restrict or ban these markets, we risk pushing activity to unregulated offshore platforms where theres no consumer protection. Id much rather trade on a CFTC-regulated platform like Kalshi, where there are safeguards in place. The CFTC already has strong tools to combat manipulation and insider trading in other derivatives markets. I believe those can be adapted here without resorting to broad categorical bans that punish honest participants. Informed trading, even if its by people with better insights, improves price discovery and benefits everyone by making the market more accurate.
I want to touch on a few specific questions from the ANPR. Regarding Questions 7-14 on public interest, I think prediction markets strike a crucial balance between innovation and protection when regulated properly. Theyre not gaming; they serve real economic purposes like hedging and information aggregation. On Questions 29-32 about inside information, I believe the existing laws banning insider trading by federal employees are enough if enforced. And for Questions 33-40 on classification, I urge the CFTC to avoid labeling event contracts as gambling. That misrepresents their purpose. Finally, the U.S. should lead in financial innovation, not cede ground to other countries by over-regulating.
I ask the CFTC to support proportionate, targeted rules for prediction markets. Focus on specific risks like manipulation with the tools you have, and dont impose broad restrictions that drive activity offshore or limit access for everyday traders like me. Thank you for considering my perspective.
Sincerely,
Karl Rein
