Comment Text:
Dear Chairman and Commissioners,
My name is Jared Castillo, 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 I wanted to share my thoughts on 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 hope my perspective as an active participant can help inform your approach.
I rely on prediction markets for insights that I simply can't get from polls or pundits. I've seen firsthand how these markets often predict election outcomes or public events more accurately than traditional sources. That information isn't just useful for traders like me; it benefits everyone, from policymakers to regular citizens trying to understand the world. Beyond forecasting, I also use these markets to hedge personal financial risks. For instance, trading on election outcomes helps me manage uncertainties that could impact my investments or taxes. This isn't gambling. It takes research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" would be a misstep, as they serve real economic purposes like price discovery and risk management.
I also believe that informed trading improves market accuracy. When people with knowledge participate, the prices reflect better information, which helps everyone. I'm concerned, though, about the idea of broad bans or over-restrictions to address issues like insider trading or manipulation. The CFTC already has strong tools to tackle these problems in other derivatives markets, and those can be adapted here. Banning entire categories of contracts or shutting out regular traders like me punishes the wrong people. Worse, it pushes activity to unregulated offshore platforms, which are far less safe than a regulated market like Kalshi. On this point, I'd direct your attention to Questions 7-14 on public interest and Questions 29-32 on inside information in the ANPR. I urge you to focus on targeted, proportionate rules rather than sweeping prohibitions.
Another worry I have is the US falling behind. Prediction markets are a form of financial innovation, and America should be leading the way, not ceding ground to other countries. Regulated markets here give consumers protection and ensure transparency, which benefits data-driven decision-making for the public. I'd reference Questions 33-40 on classification and costs-benefits, where I think the focus should be on fostering innovation while managing risks sensibly.
I'm not blind to the concerns about manipulation or consumer harm, but I believe the answer lies in smart regulation, not restrictions that drive activity underground. Please support a framework for prediction markets that allows regular traders like me to participate in legal, regulated environments while addressing specific risks with the tools you already have.
Thank you for considering my input.
Sincerely,
Jared Castillo
