Comment Text:
I respectfully disagree with your proposal to disallow markets in election events.
I understand the concern about the possibility of introducing gaming into the election process, in the sense of individuals casting their votes for the purpose of financial gain rather than genuine civic interest.
However, assuming the events themselves are appropriately defined, I believe the possibility of such gaming, or even the possibility of individuals *believing* such gaming is possible and giving it a try, is extremely remote. All that is required is to make sure that the events themselves are not defined to include such a small number of voters that a meme stock-like band of individuals could successfully sway the outcome.
For example, it is inconceivable that the election result for an entire state, based on the votes of millions of individuals, could possibly be swayed regardless of the amount of trading in the contracts for that event. Realistically, only a small fraction of voters in any state would have a financial interest in those contracts, and even if they were all to collude in their voting, which is again highly unrealistic, the net impact could not reasonably be expected to sway the outcome of the election.
If, on the other hand, a contract were constructed based on the outcome of an individual precinct, the possibility of collusion and successful gaming of the result seems more plausible, albeit still remote.
Consequently, the potential harm of allowing the trading of contracts on election events seems minimal. However, the potential benefits are substantial.
Most importantly, such markets would be the surest way of providing non-partisan expectations of election outcomes, which benefits individuals, businesses, and society alike. To whatever extent we believe election polling to be useful and allowable, we should feel even more so about markets on election results, precisely because they are less able to be manipulated.
Investors in a contract on an election event have no realistic hope of their investment swaying an election, and their expected profit is maximized by investing according to their truthful expectation of the election result. The market-determined price of the contract provides uniquely valuable insight into the collective weighing of all available information about the election, including poll results, by a multitude of investors who each have a vested interest in correctly predicting what the result of the election *will* be, not what they *hope* it will be.
I respectfully but strongly urge the CFTC to reconsider its position on this matter.
