Comment Text:
Dear CFTC,
I am writing to you as a resident of Texas who values prediction markets, event contracts trading, and particularly in the context of election contracts, to express my views on the importance of these contracts in a regulated marketplace.
As someone who would use prediction markets to hedge risks associated with election outcomes, I believe these contracts are essential because they provide a mechanism for individuals and businesses to manage their exposure to political risks. This is particularly important as the outcomes of elections can significantly impact economic conditions and policy decisions that affect various sectors. Wall Street has access to these types of tools and I believe Main Street should have similar access.
In light of the recent proposal by the CFTC, I would like to highlight that the Commission's current interpretation of the law undermines the potential benefits these contracts offer for risk management. Further, the definition of 'gaming' proposed by the CFTC is overly broad and mischaracterizes the nature of these contracts. Additionally, labeling election contracts as akin to 'gaming' ignores the extensive data demonstrating their utility. Finally, the CFTC has not demonstrated any material harm or concern from these markets other than speculation and fact-less statements.
I am also very concerned about the potential of this rule making for driving this trading activity offshore, where it would be less regulated (or not regulated at all!) and more susceptible to fraud and manipulation. This is not what you should want to happen. We should want regulated and legal activity to happen onshore, with government oversight. 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.
Therefore, I respectfully request the Commission to extend the comment period to allow for more comprehensive feedback from the industry and ensure that all perspectives are adequately considered. The 60-day period for this Event Contract proposa is rushed and is not sufficient time for this rule to be considered from all who want to weigh in.
In response to the CFTC's question in the proposal, I believe it is crucial to consider the hedging and price-basing utility of these contracts when evaluating their public interest. These contracts provide significant value by allowing market participants to hedge against political risks and generate valuable information that benefits the broader public. Everyone will benefit from these markets.
Event contracts as an asset class are legal, regulated, and safe, and they generate valuable information for the public. Election contracts would be no different. The CFTC should reconsider its stance and work closely with stakeholders to develop a regulatory framework that supports these contracts while addressing any legitimate concerns. I appreciate your attention to this matter and look forward to an extended comment period.
Thank you.
John
