Comment Text:
Dear Chairman and Commissioners,
My name is Sam Capper, and I'm a law student based in Minnesota. I'm writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I'm relatively new to the concept of prediction markets, but as someone who values individual freedom and understands the importance of well-regulated financial systems, I strongly support the development of proportionate regulations for these markets rather than overly restrictive rules or outright bans.
I see prediction markets as a legitimate tool for aggregating information and managing risk, not as a form of gambling. Event contracts serve real economic purposes, like hedging against uncertainties that impact everyday life, whether it's a policy change affecting a small business or an economic indicator influencing personal finances. Labeling these contracts as gaming dismisses their value and ignores the research, analysis, and judgment that go into trading them, skills not unlike those used in traditional investing. I believe ordinary citizens like myself should have the freedom to participate in these legal, regulated markets. Restricting access would only concentrate the benefits of this information among large institutions, which feels inherently unfair.
One concern I want to highlight is the risk of driving activity to unregulated offshore platforms if the CFTC imposes overly strict rules. I've read about platforms like Kalshi, which operate under CFTC oversight as a designated contract market. These regulated environments offer transparency and accountability that protect participants far better than shadowy, offshore alternatives. If legitimate markets are stifled, people won't just stop trading; they'll turn to less safe venues where theres no oversight. Thats a worse outcome for everyone. I urge the CFTC to focus on fostering regulated spaces where innovation can thrive safely.
Id like to address a couple of specific questions from the ANPR. Regarding Question 7 under Public Interest, I believe the balance between innovation and consumer protection lies in targeted rules that address specific risks, not broad prohibitions. And for Question 15 under Listed Activities, I argue that event contracts should not be classified as gaming when they serve clear economic functions like price discovery and hedging. The CFTC has the tools to distinguish between legitimate markets and problematic ones on a case-by-case basis.
Im not blind to the concerns about manipulation or insider trading, but I trust that the CFTCs existing authority to combat fraud and abuse in derivatives markets can be adapted here. Banning entire categories of contracts to prevent bad actors punishes law-abiding participants like me who just want access to useful financial tools.
In closing, I ask the Commission to support proportionate regulation of prediction markets. Allow these markets to grow under clear, fair rules that protect consumers while preserving access for ordinary citizens. Dont let overregulation push activity into unsafe, unregulated corners of the internet.
Thank you for considering my perspective.
Sincerely,
Sam Capper
