Comment Text:
Dear Chairman and Commissioners,
My name is David Steffes, and I'm a recent graduate from Texas with a background in markets and economics. As a trader and investor, I've been actively trading on prediction markets like Kalshi, and Im writing to express my strong support for proportionate regulation of these markets in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets provide unique value and should not be overly restricted or banned.
I got into trading on prediction markets because they offer insights I can't find elsewhere. Unlike polls or pundits, the prices on platforms like Kalshi reflect real-time, crowd-sourced information that's often more accurate. As a new grad, I've even built low-latency software to trade in these event markets, and I've found them to be far more equal and fair compared to other financial markets I've participated in. Anyone can join, research, and make informed decisions, which levels the playing field. This isn't gambling, it's a skill-based activity much like trading stocks or commodities. Classifying event contracts as "gaming" ignores their legitimate economic purpose, like hedging risks or discovering prices for uncertain events.
I'm also convinced that regulated markets are the way to go. Platforms like Kalshi, under CFTC oversight, are safer and more transparent than unregulated offshore alternatives. If the CFTC bans or over-restricts these markets, activity will just move to places like Polymarket, where there are greater risks and opaque conditions. The U.S. should lead in financial innovation, not cede this space to other countries. Plus, the CFTC already has strong tools to prevent manipulation and insider trading in other derivatives markets. Those can be adapted here without resorting to broad categorical bans. Targeted regulation that addresses specific risks makes more sense.
Id like to touch on a couple of specific questions from the ANPR. Regarding Questions 7 and 8 under Public Interest, I believe prediction markets benefit society through better price discovery and risk management. Informed trading, as discussed in Questions 29-32 on Inside Information, actually improves accuracy and helps everyone, not just traders. Academic research backs this up, showing these markets aggregate information efficiently. And on Question 15 about defining "gaming," I strongly feel event contracts serve real economic purposes and shouldn't be lumped in with gambling.
Prediction markets are a powerful tool for people like me to engage with real-world events and manage uncertainty. I urge the CFTC to support their growth with balanced, targeted rules rather than heavy-handed restrictions that push innovation and activity offshore. Thank you for considering my perspective.
Sincerely,
David Steffes
