Comment Text:
Dear Chairman and Commissioners,
My name is Declan Crotty, and I'm a trader and investor based in Illinois. I'm writing to share my strong support for the proportionate regulation of prediction markets as outlined in the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I've been actively trading on platforms like Kalshi for a while now, and I believe these markets provide real value to individuals like me, as well as to society at large.
As a trader, I rely on prediction markets for insights that I simply can't get from polls or pundits. Time and again, these markets have proven more accurate in forecasting elections and other public events. That kind of information isn't just useful for my trades; it helps everyone make better decisions, from regular folks to policymakers. Beyond forecasting, I use these markets to hedge personal financial risks. For instance, trading on election outcomes or economic indicators helps me offset potential impacts on my investments or business decisions tied to policy changes. This isn't gambling. It takes research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" would be a mistake; they serve legitimate economic purposes like price discovery and risk management.
I'm also concerned about the alternative to regulated markets. Platforms like Kalshi, under CFTC oversight, are transparent and safe. If prediction markets are banned or over-restricted, activity will just move to unregulated offshore platforms where there's no consumer protection. I've seen firsthand how regulated markets provide accountability, and Id hate to see the U.S. push innovation and talent overseas by clamping down too hard. We should be leading in financial innovation, not ceding ground to other countries.
I appreciate that the CFTC is asking for input on these issues, and Id like to address a few specific questions from the ANPR. On Question 7, regarding public interest, I believe prediction markets balance innovation with consumer protection when regulated properly. They democratize access to information and allow informed trading to improve price discovery, benefiting all participants. On Question 29, about inside information, I think informed traders actually enhance market accuracy, and existing laws already prohibit insider trading by federal officials. The CFTC has robust tools to tackle manipulation, as noted in Questions 1 and 2. Rather than broad bans, targeted rules can address specific risks without punishing honest participants.
Im not blind to the concerns about manipulation or insider trading, but shutting down or over-restricting these markets isn't the answer. Punishing everyone for the actions of a few bad actors makes no sense. Instead, use the authority you already have to enforce the rules.
In closing, I urge the CFTC to support proportionate regulation of prediction markets. Dont ban or overly restrict them. Keep the U.S. at the forefront of financial innovation while protecting consumers through sensible, targeted oversight. Thank you for considering my perspective.
Sincerely,
Declan Crotty
