Comment Text:
Dear Chairman and Commissioners,
My name is Darius Phan, and I'm a student from California with a strong interest in economics and public policy. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who actively trades on platforms like Kalshi and Polymarket, I want to express my support for well-regulated prediction markets and urge the CFTC to adopt a balanced approach that fosters innovation while protecting consumers.
I've found prediction markets to be incredibly valuable, both as a learning tool and for practical reasons. As a student, I follow elections and major public events closely, and I've seen firsthand how these markets often predict outcomes more accurately than polls or pundits. For example, during the last election cycle, platforms like Kalshi gave me a clearer picture of likely results than any news outlet. This isn't just useful for me; it helps everyone, from voters to policymakers, make better decisions with better information. I also use these markets to hedge small personal risks, like potential policy changes that could affect my student loans or part-time job. It's not gambling, it's a way to manage uncertainty with research and judgment, much like traditional investing.
I'm concerned that overly restrictive rules or broad bans could push activity to unregulated offshore platforms, which are far less safe than CFTC-registered markets like Kalshi. If the US wants to lead in financial innovation, we should be encouraging regulated markets, not driving users to less transparent alternatives. I also believe event contracts shouldn't be labeled as gaming. They serve real economic purposes, like price discovery and hedging, which are distinct from betting for entertainment.
Regarding specific questions in the ANPR, Id like to address Question 7 on balancing innovation and consumer protection. I think the CFTC can achieve both by focusing on proportionate, targeted rules rather than categorical restrictions. On Question 29 about inside information, I believe informed trading often improves price discovery and benefits all participants, as long as existing laws against insider trading are enforced. The CFTC already has strong tools to prevent manipulation and abuse, as noted in Questions 1 and 2. There's no need to reinvent the wheel; just apply those tools effectively.
I understand concerns about potential risks, like manipulation or misuse by bad actors. But banning or over-restricting these markets punishes everyone for the actions of a few. Instead, focus on enforcing current laws and tailoring regulations to specific issues. Shutting down prediction markets would be like closing the stock market over insider trading. It's not the answer.
I urge the CFTC to support regulated prediction markets with fair, targeted rules that allow ordinary people like me to participate safely. Let's keep the US at the forefront of financial innovation while ensuring consumer protection through regulation, not prohibition.
Sincerely,
Darius Phan
