Comment Text:
Dear Chairman and Commissioners,
My name is Douglas Rice, and I'm a finance professional from California with over 15 years of experience teaching derivatives and futures markets in MBA programs. I’ve also participated in prediction markets myself on a few occasions. I’m writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for well-regulated prediction markets under the CFTC’s oversight.
I’ve seen firsthand how prediction markets aggregate information in ways that polls and pundits simply can't match. Their forecasts on elections and public events are often more accurate because they reflect real financial stakes, not just opinions. This isn't gambling; it’s a legitimate tool for price discovery that benefits society as a whole, from individual traders to policymakers who can use this data. As someone who’s taught finance, I can attest to the academic research backing this up, studies by economists like Hanson and Wolfers show how these markets improve information transparency. I believe the CFTC should prioritize data transparency and access to ensure these benefits reach the public, as asked in Question 7 on public interest.
I also value the freedom to participate in legal, regulated markets. Platforms like Kalshi, operating under CFTC oversight as a designated contract market, provide a safe environment with consumer protections that unregulated offshore alternatives lack. If the CFTC over-restricts or bans broad categories of event contracts, activity will just move to less safe venues outside US jurisdiction. I’ve traded on prediction markets myself, and I’d much rather do so under the CFTC’s rules than take risks offshore. On Questions 15-22 about listed activities, I urge you to focus on proportionate, targeted regulation rather than sweeping prohibitions that push traders away from oversight.
The US has a chance to lead in financial innovation here. We shouldn’t cede this space to other countries by stifling markets with heavy-handed rules. I can’t think of a better regulatory body than the CFTC to handle this. State-level variances or offshore free-for-alls would lower standards and create chaos. The CFTC already has tools to address concerns like manipulation and insider trading, as noted in Questions 1-6 and 29-32. Informed trading, by the way, often improves price discovery; it doesn’t hurt the market, it helps everyone by making prices more accurate. The answer isn’t to ban markets but to enforce existing laws against bad actors.
I’m not blind to risks, consumer protection matters to me. But shutting down prediction markets to stop a few potential issues punishes the majority who use them responsibly. I ask the CFTC to adopt balanced rules that protect traders while allowing these markets to thrive. Lead the way in innovation and keep this under your expert oversight.
Sincerely,
Douglas Rice
