Comment Text:
Dear Chairman and Commissioners,
My name is Soham Jain, and I'm a software engineer from Georgia. I run a small proprietary trading shop, and a big part of my business comes from trading strategies on prediction markets like Kalshi. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) because I strongly support well-regulated prediction markets and believe they serve a valuable purpose for individuals like me, as well as the broader economy.
As someone in tech who works with data and systems every day, I see firsthand how prediction markets aggregate information in ways that nothing else can. The prices on platforms like Kalshi often give me better insights than polls or news commentary, especially when it comes to events that impact my business. For instance, I've used these markets to hedge risks tied to economic policy changes, like potential shifts in interest rates or regulatory decisions that could affect tech funding. This isn't just playing a game. It's a real tool for managing uncertainty, no different from how someone might use futures to hedge commodity prices.
I also worry about the idea of over-restricting or banning these markets. If the U.S. clamps down too hard, activity will just move offshore to unregulated platforms where there's less oversight and more risk. I've seen this happen in other areas of tech and finance. Keeping these markets regulated under the CFTC's watch, like Kalshi is, keeps things transparent and safer for everyone. Plus, the U.S. should be leading in financial innovation, not falling behind other countries. Academic research, like studies by economists such as Justin Wolfers, backs this up, showing how prediction markets improve data transparency and forecasting accuracy.
I want to address a few specific questions from the ANPR. On Question 15, about defining gaming versus legitimate markets, I strongly believe event contracts aren't gambling. They serve real economic purposes like hedging and price discovery, just as I do with my trades. On Question 29, regarding informed trading, I think traders with good information actually make prices more accurate, which benefits everyone, not just those trading. And on Question 7, about balancing innovation and consumer protection, I believe the answer is proportionate regulation. Target specific risks like manipulation or insider trading with existing CFTC tools, rather than broad bans that punish legitimate users like me.
I get the concerns about potential abuse, like insider trading. But those issues are already illegal, and the CFTC has the authority to enforce against them. Shutting down or over-restricting prediction markets because of a few bad actors feels like overkill. It's like closing a highway because some people speed.
I'm asking you to support fair, targeted regulation of prediction markets. Don't ban or overly restrict them. Theyre a vital tool for people like me to manage risk and make informed decisions, and they help the economy by providing unique information. Thank you for considering my input.
Sincerely,
Soham Jain
