Comment Text:
Economists argue that prediction markets are an effective way of aggregating the “wisdom of crowds” to forecast future events, and that they can serve a role in hedging against risks associated with events in the same way that commodity futures contracts can be used to hedge against risks associated with commodity prices. They also argue that, within a formal regulatory framework similar to what we have for commodity futures, they pose no more risks associated with market manipulation than other futures contracts do. Furthermore, they argue that the best way to allow our financial regulators to understand the benefits and harms of different types of idea futures is to establish a pathway for legal, regulated prediction markets. This would allow different companies to try out different types of futures (likely with some safeguards such as position limits) so that the benefits and harms of each can be evaluated in a safe and controlled manner. I urge the Commission to allow Kalshi to run election markets, especially given the court ruling allowing PredictIt to do the same and the fact that it is unfair for our legal system to be treating these similar cases differently.
