Comment Text:
Dear Chairman and Commissioners,
My name is Quinton Smith, and I'm a student at the Wharton School of Business, based in Ohio, pursuing a deep interest in the growth of capitalistic success and innovation. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who actively trades on platforms like Kalshi, I've seen firsthand the value of prediction markets, even though I've lost a significant amount of money (relative to my own finances) in the process. I believe these markets are a vital part of American financial innovation, and I urge the CFTC to support their growth through proportionate regulation, not restrictive bans.
I trade on Kalshi because prediction markets offer insights I can't get from polls or pundits. Their forecasts on elections and public events have consistently proven more accurate, which benefits not just traders like me but also the public and policymakers who rely on better information for decision-making. This isn't gambling, despite what some might claim. Trading on these platforms requires research and judgment, much like investing in stocks. Event contracts serve real economic purposes, like price discovery and hedging, and I strongly believe they shouldn't be classified as "gaming." I've made my trades knowing the risks, just as I might make a bad purchase on eBay. The freedom to choose is mine, and I accept the losses as part of that choice, not as a result of fraud or corruption.
I'm also concerned about the alternative. Regulated markets like Kalshi are far safer than unregulated offshore platforms. If the CFTC over-restricts or bans these markets, activity will just move to less safe venues, putting traders at greater risk. The CFTC already has strong tools to prevent manipulation and insider trading in other derivatives markets. Those same tools can and should be applied here, rather than punishing everyone with broad prohibitions. Ive seen no evidence of systemic fraud on Kalshi, and I trust the existing safeguards can handle bad actors without shutting down the entire space.
Addressing some of your specific questions, like those in Topic Area B on public interest (Questions 7-14), I believe prediction markets balance innovation and consumer protection when properly regulated. And on Topic Area C (Questions 15-22), I urge you to avoid labeling these contracts as gaming, as they serve legitimate purposes. Finally, as a student of business, Im passionate about the U.S. maintaining its edge in financial innovation. We can't afford to cede this space to other countries, as raised in your cost-benefit questions (Questions 33-40). Our economic success has always been built on market-driven growth and the freedom to trade and invest. Prediction markets are just the latest example of that principle in a high-tech, real-time world.
Please support well-regulated prediction markets with targeted rules that address specific risks, not blanket restrictions. Lets keep the U.S. at the forefront of financial progress.
Sincerely,
Quinton Smith
