Comment Text:
Dear Chairman and Commissioners,
My name is Seth Embry, and I'm a trader and investor based in Texas. I've been actively trading on prediction markets like Kalshi and Polymarket for a while now, and I'm writing to support the proportionate regulation of these markets in response to your Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets provide immense value to people like me and to society as a whole, and I urge the CFTC to craft rules that protect consumers without stifling innovation or pushing activity offshore.
As a trader, I've seen firsthand how prediction markets produce forecasts that are often more accurate than polls or pundits. For elections and major public events, the prices on these platforms cut through the noise and give a clearer picture of what's likely to happen. This isn't just useful for traders; its valuable information for the public, media, and even policymakers. Beyond forecasting, these markets let individuals and businesses hedge real risks. I've used them to offset uncertainties around election outcomes that could impact my investments or tax planning. This isn't gambling. Its a legitimate economic tool, much like trading stocks or commodities, and classifying event contracts as "gaming" would be a misstep.
I also want to stress that regulated markets, like Kalshi under CFTC oversight, are far safer than unregulated offshore platforms. If the CFTC over-restricts or bans these markets, people like me won't just stop trading; we'll be pushed to less transparent, riskier venues. The U.S. should be leading in financial innovation, not ceding ground to other countries. I'm all for consumer protection, but the CFTC already has strong tools to tackle manipulation and insider trading in other derivatives markets. Those same tools can work here without resorting to broad categorical bans. Targeted regulation makes more sense than heavy-handed restrictions.
Specifically, in response to some of your questions, I think prediction markets serve the public interest by enhancing price discovery and risk management (Questions 7-9 under Topic B). On the issue of gaming versus legitimate markets (Questions 15-17 under Topic C), I strongly believe event contracts have clear economic purposes like hedging and shouldn't be lumped in with gambling. And regarding regulatory costs (Questions 33-35 under Topic F), I urge you to consider the unintended cost of driving activity offshore if rules are too restrictive.
Prediction markets have real benefits, and I'm asking the CFTC to regulate them in a balanced way that addresses specific risks without shutting down the entire space. Protect consumers, yes, but dont punish law-abiding traders or kill innovation in the process.
Sincerely,
Seth Embry
