Comment Text:
Dear Chairman and Commissioners,
My name is Avi Thaker, and I'm a trader and investor based in California. I run a small quant fund, and Ive been actively trading on prediction markets like Kalshi and Polymarket for some time now. Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for proportionate regulation of these markets. Theyre an invaluable tool for me, and I believe they benefit society as a whole.
As someone who analyzes markets for a living, I can tell you that prediction markets often produce forecasts far more accurate than polls or pundits. Ive seen this firsthand during election cycles. For instance, in 2024, I was trading equity markets to hedge risks tied to election outcomes, as documented in my GitHub repo (https://github.com/athaker/econ_136/tree/master/2024). But thats an indirect, messy way to manage risk. Prediction markets let me directly express my view on an event, which is cleaner and more efficient. This isnt just about me; better price discovery helps everyone, from policymakers to regular citizens, make informed decisions. Faster price discovery also reduces the window for manipulation, and broader access ensures the information isnt hoarded by big players.
I also use these markets to hedge real financial risks for my fund. Whether its an election outcome that could shift tax policy or a regulatory change that impacts my investments, prediction markets give me a way to protect my portfolio. This isnt gambling. It takes research and judgment, just like trading stocks or futures. Classifying event contracts as gaming ignores their legitimate economic purpose, and I urge the CFTC to recognize this in response to Questions 15-22 on listed activities.
Im also concerned about US competitiveness. If we over-restrict or ban these markets, were just pushing activity to unregulated offshore platforms, which are far less safe than a CFTC-registered exchange like Kalshi. The US should be leading in financial innovation, not ceding ground to other countries. I think this ties directly to Questions 7-14 on public interest and innovation versus consumer protection. Regulation should focus on safety and transparency, not prohibition.
On the topic of informed trading, addressed in Questions 29-32, I believe it improves price discovery. Yes, insider trading is a risk, but its already illegal, and the CFTC has tools to enforce against manipulation. Punishing everyone by shutting down markets isnt the answer. Lets target the bad actors instead.
I strongly encourage the CFTC to support well-regulated prediction markets with clear, proportionate rules. Dont let over-regulation drive this valuable tool offshore or limit its potential to help people like me manage risk and access better information. Thank you for considering my perspective.
Sincerely,
Avi Thaker
