Comment Text:
Dear Chairman and Commissioners,
My name is Karl Schneider, and I'm a trader and investor based in Indiana. I've been actively trading on prediction markets like Kalshi for a while now, and I'm writing to support well-regulated prediction markets in response to your Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets are valuable for me personally and for society as a whole, and I urge you to craft rules that allow them to thrive under fair oversight.
As someone who trades regularly, I can tell you that prediction markets give me insights I can't find anywhere else. Whether it's an election outcome or a major public event, the prices on these platforms often predict results more accurately than polls or pundits. I've seen this firsthand on Kalshi, where the aggregated bets of many traders create a clearer picture of what's likely to happen. This isn't just useful for me; it helps everyone, from regular folks to policymakers, make better decisions with better information. I think this ties directly to your questions on public interest, like Question 7 on balancing innovation and consumer protection, and Question 9 on price discovery. These markets are a public good when regulated properly.
I also value the freedom to participate in legal, regulated markets. Platforms like Kalshi, operating under CFTC oversight, are far safer than unregulated offshore sites. If you ban or over-restrict prediction markets, you're not stopping the activity; you're just pushing it to less safe places where there's no accountability. I've traded enough to know that regulated markets give me confidence my trades are fair and transparent. This relates to your questions on core principles, like Question 1 on manipulation prevention. The CFTC already has strong tools to stop fraud and insider trading. Use those tools, don't shut down the whole market.
Another point for me is hedging. I use prediction markets to manage real risks, like how election outcomes might affect my investments or business decisions. This isn't gambling; it's a legitimate economic tool, just like trading stocks or futures. Classifying event contracts as "gaming," as discussed in Questions 15 and 16, misses the point. These contracts serve a purpose, whether it's hedging or price discovery. And speaking of price discovery, informed trading makes these markets better. When people with knowledge trade, as touched on in Question 29, the prices get sharper, and we all benefit from that accuracy.
I'm not blind to the risks. Manipulation and insider trading are real concerns, but banning markets isn't the answer. Punish the bad actors, not the rest of us. I believe proportionate regulation, not heavy-handed restrictions, is the way to go. Please support prediction markets with rules that keep them safe and accessible for everyday traders like me.
Sincerely,
Karl Schneider
