Comment Text:
Dear Chairman and Commissioners,
My name is Jonathan Foster, and I'm a financial advisor based in Alabama. I work with clients every day to help them make smart decisions about their money, and I actively trade on prediction markets like Kalshi as part of my own research and risk management. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to urge the CFTC to support proportionate regulation of these markets, rather than imposing broad bans or overly restrictive rules.
I rely on prediction markets daily to get insights that I can't find anywhere else. Their prices often predict outcomes more accurately than polls or pundits, whether it's an election result or an economic indicator like a CPI print. This isn't just useful for me as a trader; it helps me advise my clients better by understanding risks tied to political or economic events. For instance, Ive used these markets to hedge uncertainties around policy changes that could impact my clients investments or my own business planning. This isn't gambling. It takes research and judgment, just like trading stocks or futures. Classifying event contracts as "gaming" would be a mistake when they serve real economic purposes like price discovery and hedging.
I'm also concerned about consumer protection, which is why I strongly believe regulated markets like Kalshi are the way to go. If the CFTC over-restricts or bans these markets, activity will just shift to unregulated offshore platforms where theres no oversight. Thats far riskier for everyone. The CFTC already has powerful tools to tackle manipulation and insider trading in other derivatives markets. Those same tools can work here without punishing legitimate participants. Plus, informed trading actually improves price discovery, benefiting all of us in the market.
On the topic of innovation, I think the US should be leading the charge in financial technology. If we stifle prediction markets with heavy-handed rules, were handing that leadership to other countries. Id like to address a couple of specific questions from the ANPR. On Question 8 under Public Interest, I believe prediction markets do serve the public by providing unique data and hedging opportunities. And on Question 15 under Listed Activities, I urge the CFTC not to label these contracts as gaming, since they have clear economic value.
I understand there are concerns about manipulation or insider trading, but broad categorical bans aren't the answer. Targeted, proportionate regulation can address specific risks while letting these markets thrive. Please support a framework that allows legal, regulated prediction markets to operate and keeps everyday participants like me from being pushed offshore.
Thank you for considering my input.
Sincerely,
Jonathan Foster
