Comment Text:
Dear Chairman and Commissioners,
My name is Brandon Johnson, and I'm a software engineer working in the tech industry in Illinois. Im writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in the Federal Register (91 FR 12516). I work at a financial exchange that offers competitive event contract products, and Ive used prediction markets a few times myself. I believe they can serve a valuable purpose, but I also have serious concerns about how theyre marketed and who they target. Im in favor of regulated prediction markets, but only with strict, targeted rules rather than broad bans.
Ive seen firsthand how prediction markets can provide unique information that you cant get from polls or news outlets. As someone in tech, I value accurate forecasting for elections and public events. When these markets aggregate data from lots of participants, they often predict outcomes better than so-called experts. Thats useful for public decision-making and price discovery, which benefits everyone, not just traders. I think this aspect of prediction markets, if properly managed, could help inform policy and even improve how we understand complex issues. Its a tool worth preserving.
That said, Im troubled by how some prediction markets operate. Too often, they seem to chase profits by targeting retail investors with things like sporting events. Honestly, this feels more like gambling than anything else. It undermines the legitimate arguments for prediction markets and incentivizes bad public behavior. Regular people can get hooked and lose money they cant afford, and I see that as a clear moral hazard. My concern isnt just theoretical; Ive watched friends get drawn into betting on frivolous outcomes, and its not a good look for an industry that claims to offer real economic value.
This ties into some of the CFTCs questions, particularly in Topic Area B on Public Interest (Questions 7-14) and Topic Area C on Listed Activities (Questions 15-22). I think the CFTC should focus on defining what constitutes a legitimate market versus something thats just gaming in disguise. Not all event contracts are equal, and Id urge you to create rules that prioritize markets tied to significant public events over trivial or entertainment-based ones. Broad categorical bans arent the answer, though. Targeted regulation that addresses specific risks, like consumer exploitation or manipulative trading, would be more effective. You already have tools to combat manipulation and insider trading in other markets. Use them here too.
I support proportionate regulation of prediction markets. Dont over-restrict or ban them outright, but please set clear boundaries to protect regular folks from being lured into what often feels like a casino. Focus on fostering the markets potential for accurate forecasting while curbing the aspects that prey on vulnerable people. Thank you for considering my perspective.
Sincerely,
Brandon Johnson
