Comment Text:
Dear Chairman and Commissioners,
My name is Byron Price, and I'm a trader and investor from Massachusetts. I've been actively trading on prediction markets like Kalshi and Polymarket for some time now, and Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I support the development of well-regulated prediction markets, and I want to share my perspective on why theyre valuable and how the CFTC can approach regulating them without stifling their potential.
Ive always believed novel ideas deserve a fair shot before we burden them with heavy-handed rules. Prediction markets are unique in that they often produce forecasts for elections and public events that are more accurate than polls or pundits. Ive seen this firsthand trading on platforms like Kalshi, where the collective wisdom of participants often cuts through the noise of media speculation. This isnt just useful for traders like me; its valuable information for the public and even policymakers who need reliable data to make decisions. Beyond forecasting, I also use these markets to hedge personal financial risks tied to economic events, like Federal Reserve decisions on interest rates. Being able to offset potential impacts on my investments through these contracts is a real economic benefit, not just a game.
That said, Ill be straight with you: prediction markets are a weird hybrid. Some contracts, like betting on a movies Rotten Tomatoes score, feel a lot like gambling. Others, like trading on Fed rate hikes, are legitimate financial tools. I think the founders of platforms like Polymarket and Kalshi overstate their case when they claim none of this resembles gambling. Theres a line, and we need to draw it. Im particularly concerned about markets where outcomes can be easily gamed, like betting on what someone will say in a press conference. Those kinds of contracts invite manipulation and dont serve a clear economic purpose. Id urge the CFTC to focus on limiting those specific types of contracts rather than broad bans.
On your specific questions, I want to address a few from the ANPR. Regarding Question 7 on public interest, I believe prediction markets serve the public by improving price discovery and democratizing access to information, but only if theyre regulated sensibly. On Question 29 about inside information, I think informed trading generally improves price accuracy and benefits all participants, as long as its not based on illegal nonpublic data. And on Question 15 about defining gaming, Id encourage a narrow definition that targets truly frivolous contracts while preserving markets with economic utility. Finally, regulated platforms like Kalshi are far safer than unregulated offshore ones. If we over-regulate or ban these markets here, activity will just move to less transparent venues, which helps no one.
I ask the CFTC to support proportionate regulation that addresses specific risks like manipulation while allowing prediction markets to grow. Dont shut down an innovative tool because of a few bad apples or poorly designed contracts. Lets refine the system, not reject it.
Sincerely,
Byron Price
