Comment Text:
Thank you for providing the market regulation which is essential to maintaining the value of markets not just for the participants, but for society.
We are in a time of elevated tension in the political arena; should this make regulators more wary of markets which relate to political issues?
Hundreds of economic data points impact political opinion -- employment, inflation, etc. And there are public markets available inside and outside the CTFC's purview which trade on that information. It is accepted that information from those markets informs governance decisions at all levels. Markets provide information of social value.
How are election outcome prediction markets essentially different from this?
And do such markets influence society positively or negatively?
I do not see any evidence of a materially negative impact of these markets on society.
I do see a benefit to the public in the provision of a source of timely information about election-relation opinions which is unavailable from other sources.
Election opinion polls are deeply ingrained in the US political process and in media coverage of election season. We know that the public wants this information. We have also learned, in the past few election cycles, that opinion polling is much less accurate than it used to be. Technological change has made public polling unreliable. And falling standards of media impartiality have made the presentation of polling results to segmented audiences even less meaningful.
Prediction markets bypass many of the problems of polling. The participants are expressing an opinion about an outcome, not a personal preference. It's not a beauty contest or a means of expressing support for any desired outcome.
Participants in prediction markets are relaying into the market what they see and feel in the world around them and in so doing they are acting as sensors spread out across the vast and diverse landscape of US politics. Individually, those opinions have little value to anyone else. Collectively, the market price that results from the aggregate of those opinions is, in my view, as independent an indicator of public thinking as we have available.
Finally, the limits on Kalshi's contract size are the protection against intentional manipulation of the level of the market.
In summary:
Social cost of these markets: negligible
Social value of these markets: significant.
I hope commissioners will see it this way and vote accordingly.
Thank you for taking public comment.
