Comment Text:
Dear Chairman and Commissioners,
My name is Luke Custer, and I'm a journalist based in North Carolina. Im writing to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I've used prediction markets a few times myself, and I strongly believe they serve a valuable purpose for individuals like me, as well as for society at large. Im asking you to support proportionate regulation of these markets, not bans or overly restrictive rules.
As someone who covers news and public events, Ive seen firsthand how prediction markets often provide more accurate forecasts than polls or pundits. When Im trying to understand the likelihood of an election outcome or a major policy shift, the aggregated data from these platforms cuts through the noise. Its not just useful for me; its better information for the public and even for policymakers who need to make informed decisions. This ties directly to your questions 7 and 8 in the ANPR about the public interest and price discovery benefits of event contracts. I believe the evidence is clear that these markets improve our collective understanding of complex events.
Ive also used prediction markets to hedge personal financial risks tied to public events, like potential tax changes that could impact my freelance income. This isnt gambling; its a practical tool, much like any other investment used to manage uncertainty. On your question 15 about defining gaming versus legitimate markets, Id argue that event contracts serve real economic purposes and shouldnt be classified as gambling. Trading on these platforms requires research and judgment, not luck. Calling it gaming would be like labeling stock trading as a casino game.
Im also concerned about what happens if these markets are over-regulated or banned. Platforms like Kalshi, which operate under CFTC oversight, are far safer than unregulated offshore sites. If we push this activity out of the U.S., as I worry could happen with overly restrictive rules, people will just go to less secure venues. Thats worse for everyone. On question 14 about balancing innovation and consumer protection, I think the U.S. should lead in financial innovation, not cede ground to other countries. Lets keep these markets here, under your supervision, where they can be properly monitored.
Finally, I believe informed trading actually helps price discovery, as you ask about in question 29. When people with knowledge participate, the market becomes more accurate, and that benefits everyone. Yes, insider trading is a concern, but its already illegal, and the CFTC has tools to address manipulation. Dont punish the rest of us by restricting access to these markets.
I urge you to craft rules that allow prediction markets to thrive under fair regulation. Theyre a powerful tool for forecasting, hedging, and democratizing information. Please dont let overregulation or outright bans push this innovation offshore or out of reach for ordinary people like me.
Sincerely,
Luke Custer
