Comment Text:
Dear CFTC Recipient,
I am writing to you as a Software Engineer who reads news alongside prediction markets to understand how accurate or real the headlines actually are to express my views on the importance of election contracts, award shows and contests, and sports contracts in the regulated marketplace.
My unique perspective allows me to see firsthand how prediction markets can serve as a valuable tool for verifying the reliability of news and forecasts. These markets generate significant information that can validate or challenge the narrative presented by media outlets.
As someone who believes the definition of 'gaming' is both wrong and overbroad, I argue that election contracts are essential because they provide a mechanism for hedging and price discovery. The assertion that these contracts exist predominantly to enable gambling is not credible and ignores substantial data and evidence highlighting their economic utility and public interest value.
Furthermore, regulated activity in this space ensures market integrity and fosters partnerships with reputable institutions, such as the collaboration between Kalshi and Susquehanna International Group. This regulation not only secures the market but also enhances market liquidity and confidence.
In light of the recent proposals by the CFTC, I would like to highlight that the current interpretation undermines the potential benefits these contracts offer for risk management and market transparency. The definition of 'gaming' being used is incorrect and overly broad, which does not account for the legitimate economic functions these contracts serve. Ignoring this data will likely drive market activity offshore to unregulated environments, which poses greater risks to market participants.
Additionally, I am concerned about the CFTC’s approach to this issue. Effective regulation requires a collaborative approach, and I urge the CFTC to engage more actively with stakeholders to understand the practical implications of these regulations. It is essential to consider the detailed comments provided by various industry experts and ask substantive questions to gain comprehensive insights.
Therefore, I respectfully request the Commission to hold a roundtable discussion, extend the comment period, and vote no on the proposed event contract rule. This will allow for more comprehensive feedback from the industry and ensure that all perspectives are adequately considered.
In response to the CFTC's questions, I believe that additional types of event contracts should be explicitly identified by the Commission in the non-exclusive list of contract types that would generally fall outside contracts that “exist predominantly to enable gambling.” These could include contracts based on macroeconomic indices or measures like tax rates (e.g., corporate and capital gains tax rates). The availability of bets or wagers at gaming venues should not be a relevant factor in determining whether an event contract constitutes 'gaming.' Moreover, staking something of value on the outcome of a political contest is not similar to gaming and should not be considered as such.
In conclusion, the benefits of election contracts, award shows and contests, and sports contracts in generating valuable market information far outweigh the purported risks. I appreciate your attention to this matter and look forward to a constructive dialogue on how best to regulate these essential contracts.
Thank you for your consideration.
Sincerely,
Lucas Kohorst
