Comment Text:
Dear Chairman and Commissioners,
My name is James Stephens, a retired computer professional from Texas. I've spent my career working with systems and data, often figuring out how to make complex things accessible and fair for regular folks. I'm new to prediction markets, but I strongly support their development under sensible, well-thought-out regulation. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to share why I think these markets are valuable and why the CFTC should regulate them proportionately rather than restrict or ban them outright.
As someone who couldn't always qualify for traditional trading accounts with big brokers due to steep margin requirements, I see prediction markets as a way for ordinary people like me to participate in commodity and event-based trading. It's a bit like trading options, but more accessible. You don't need to be a Wall Street insider to get involved, and that levels the playing field. These markets give the little guy a real shot at engaging with economic events that impact our lives, whether it's an election affecting taxes or a policy change hitting small businesses. I believe this kind of democratized access is a strength, not a problem.
That said, I understand there are risks, like manipulation or insider trading. But banning or over-restricting prediction markets isn't the answer. If you push these markets underground or offshore to unregulated platforms, you're making things less safe for everyone. I've looked into platforms like Kalshi, which operate under CFTC oversight, and it's clear to me that regulated markets are the way to go. They have transparency and accountability that offshore alternatives just don't offer. Regulation should focus on protecting consumers by keeping these markets in the U.S. under your supervision, not driving them away.
I also want to address the idea of classifying event contracts as "gaming." I don't see it that way at all. These contracts serve real economic purposes, like hedging against uncertainty or aggregating information that helps everyone make better decisions. Calling this gambling feels like a misstep, akin to labeling stock trading as a casino game just because there's risk involved. On this, I'd point to Questions 15-22 in your ANPR about defining gaming versus legitimate markets. My view is simple: if a contract helps people manage real-world risks or contributes to price discovery, it's not gambling, and it shouldn't be treated as such.
Lastly, I'm all for proportionate regulation. Target the specific risks, like insider trading or manipulation, with clear rules. You already have tools to tackle those issues in other markets, so adapt them here. Broad categorical bans or overly tight restrictions would just hurt regular participants like me. I'm asking you to support fair, accessible prediction markets with oversight that keeps them safe and transparent. Don't let heavy-handed rules shut out the little guy or push innovation offshore.
Thank you for considering my perspective.
Sincerely,
James Stephens
