Comment Text:
Dear Chairman and Commissioners,
My name is Julio Castellanos, and I'm a small business owner from California. I'm writing to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I'm relatively new to prediction markets, but I strongly support their development under fair and proportionate regulation. As someone who runs a business, I see real value in these markets for forecasting, risk management, and ensuring the U.S. stays competitive in financial innovation.
I rely on accurate information to make decisions for my business, whether it's about economic trends or public events like elections that could impact my operations. I've noticed that prediction markets often provide forecasts that beat out polls or pundits. That kind of insight isn't just helpful for traders; it benefits everyone, including business owners like me who need reliable data to plan ahead. Beyond that, these markets let people like me hedge real financial risks. For instance, an election outcome or a regulatory change could directly affect my costs or taxes. Having a way to offset that uncertainty is a practical tool, not a game.
I also believe event contracts shouldn't be lumped in with gambling. They serve legitimate purposes, like price discovery and risk management, much like other financial instruments. Calling them "gaming" ignores the research and judgment involved, similar to what I put into any investment decision. Plus, allowing regular folks like me to participate democratizes access to valuable information, which would otherwise be locked up with big institutions.
I'm aware of concerns about manipulation or insider trading, and I get why those are issues. But the CFTC already has strong tools to tackle those problems in other markets, and I believe they can be applied here too. Banning or overly restricting prediction markets doesn't solve the problem; it just pushes activity to unregulated offshore platforms, which are far riskier for consumers. I'd much rather see a regulated market like Kalshi operate under CFTC oversight than have people turn to sketchy alternatives. On this point, I think your questions 7 and 11 in the ANPR, about balancing innovation with consumer protection, hit the nail on the head. Regulation should protect users while still allowing innovation to thrive.
I also want to address question 29 on informed trading. I think traders with good information actually improve price discovery, which helps everyone. The focus should be on enforcing existing laws against insider trading, not shutting down the whole market. And speaking to question 15 on defining gaming, I urge you to recognize the economic purpose of these contracts over any superficial resemblance to betting.
The U.S. has a chance to lead in financial innovation, and I hope we don't cede that to other countries by over-regulating. Please support proportionate, targeted rules for prediction markets that address specific risks without broad bans. Let's keep these markets safe, accessible, and beneficial for all.
Thank you for considering my input.
Sincerely,
Julio Castellanos
