Comment Text:
Dear Chairman and Commissioners,
My name is Mitch Hull, and I'm a trader and investor from the United States running a small hedge fund. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I want to express my strong support for well-regulated prediction markets, as they've become an invaluable tool for me in my work, and I believe they serve a broader public good.
I first heard about platforms like Kalshi through my son, and I'll admit I didn't initially grasp how useful they could be professionally. But after diving in and actively trading on Kalshi and Polymarket, I've seen firsthand how these markets provide insights I can't get elsewhere. For instance, during the last election cycle, I relied on prediction market prices to gauge outcomes far more accurately than any poll or pundit commentary I saw on Fox News. It was striking to see how these platforms consistently outperformed traditional forecasting methods, and it helped me make better-informed decisions for my fund's positioning.
I believe prediction markets are a powerful mechanism for accurate forecasting of elections and other public events. They aggregate information from a wide range of participants, producing prices that reflect real, on-the-ground sentiment. This isn't just useful for traders like me; it benefits everyone by providing clearer information for public decision-making. I've also come to see that informed trading, even by those with deep knowledge, enhances price discovery. When people with real insight participate, the market prices get sharper, and that helps all of us who rely on this data, whether we're trading or just observing.
I understand there are concerns about things like insider trading or manipulation, and those shouldn't be ignored. But the answer isn't to ban or overly restrict these markets. The CFTC already has tools to address fraud and manipulation in other derivatives markets, and those can be applied here. Shutting down prediction markets to stop a few bad actors would be like closing stock exchanges over insider trading scandals. It punishes the majority who use these tools responsibly.
Regarding some of the specific questions in the ANPR, Id like to address Question 7 on public interest and Question 29 on inside information. On public interest, I think prediction markets clearly serve a societal benefit by improving the quality of information available to everyone, from policymakers to everyday citizens. On inside information, I believe informed traders generally help rather than hurt price accuracy, as long as existing laws against abusing nonpublic information are enforced.
In closing, I urge the CFTC to support proportionate regulation of prediction markets. Don't let overblown fears lead to bans or harsh restrictions that would push this activity offshore or underground. These markets are too valuable for forecasting and decision-making to be stifled. Thank you for considering my perspective.
Sincerely,
Mitch Hull
