Comment Text:
Dear Chairman and Commissioners,
My name is Lucas Klein, and I'm a trader and investor based in Texas. I've been actively trading on prediction markets like Kalshi and Polymarket for a few years now, and Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support the development of well-regulated prediction markets, and Id like to share why I think theyre valuable, both for me personally and for society, as well as offer some thoughts on how the CFTC can approach regulation.
As a trader, Ive seen firsthand how prediction markets provide information thats just not available anywhere else. Whether its an election outcome or a major public event, the prices on these platforms have consistently been more accurate than polls or pundit predictions. Ive used this data to make better-informed decisions, not just in trading but in understanding the world around me. This isnt just helpful for people like me; its a public good. Better forecasts mean better decision-making for everyone, from individuals to policymakers. I believe the CFTC should recognize this value, especially when considering questions 7 and 8 in your ANPR about the public interest and price discovery benefits of event contracts.
I also want to address some concerns I know the CFTC has, like manipulation and insider trading, which come up in questions 29 through 32. I get why these are worries, but the truth is, you already have strong tools to tackle them. The laws against market manipulation and insider trading apply here just as they do in other markets. Instead of broad bans or over-restrictive rules, I think the focus should be on targeted enforcement using whats already in place. Banning or heavily limiting prediction markets doesnt solve bad behavior; it just pushes trading to unregulated offshore platforms where theres no oversight at all. Thats a worse outcome for everyone.
Another point I feel strongly about is that event contracts arent gambling, despite what some might say in questions 15 and 16 about classification. Trading on these markets takes research and judgment, just like trading stocks or commodities. The economic purpose, whether its hedging or price discovery, is real. Plus, informed trading by knowledgeable participants actually makes prices more accurate, benefiting everyone in the market. A heavy-handed approach or categorical bans would kill this innovation and hurt the transparency that comes from aggregating all this data. Academic research backs this up too, showing how prediction markets improve forecasting and public information.
I urge the CFTC to adopt proportionate regulation that addresses specific risks without stifling the benefits of prediction markets. Dont let over-restriction or misclassification as gaming undermine a tool thats already proving its worth. Im happy to provide more input if needed, but my main ask is clear: support a regulatory framework that lets these markets thrive under fair, targeted oversight.
Sincerely,
Lucas Klein
