Comment Text:
The commission should regulate political events contracts, but these contracts should not be prohibited. The contracts used by Predictit and Kalshi are not gaming or gambling equivalent to betting on a sporting event. These events contracts provide important information to the markets about events of significant economic effect. These markers also provide an alternative source of information for public polling, which has become increasingly less accurate as a tool for political scientists, media, poll watchers, and others in recent years. If used correctly, these markets are no more.speculative than most futures contracts, which can be traded blindly and speculatively by some individuals, but which general correspond to events of economic significance.
These markets are in their infancy, but when mature, these markets should function to allow companies, investors, and individuals to hedge domestic political risk and provide valuable predictive information to markets, business professionals, scientists, and others. If a business professional or investor is trying to price the risk of policy shifts that would come from domestic political shifts that should not be treated as gambling. Certain investments are clearly subject to political risk at the local, state, and federal level and better information and the ability to hedge such risks would lead to more efficient markets.
Aspirationally, these markers could eventually promote democracy by providing better real time feedback to policy makers on particular policy activities and by expanding political awareness and information. Politicians and voters follow polls, but polls are subject to errors or even manipulation by a small number of political scientists and media companies who control the methodology and how widely results are distributed. Public markets on these matters would be costly to manipulate and could provide improved information available to politicians, voters, scientists, investors, and others who can benefit from better predictions about election outcomes.
