Comment Text:
Dear Chairman and Commissioners,
My name is Jonathan Montes, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi for a while now, and Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I strongly support the idea of well-regulated prediction markets, and I want to share why they matter to me and why I think the CFTC should craft rules that allow them to thrive under proper oversight.
As someone who trades regularly, I see prediction markets as a unique tool that provides information you can't find anywhere else. They've often been more accurate than polls or pundits when it comes to forecasting elections and other public events. This isn't just helpful for traders like me; it benefits everyone by improving public decision-making and price discovery. I also believe these markets democratize access to valuable insights. If only big institutions can participate, the best information stays with them. Letting regular folks like me trade makes the system fairer and the predictions sharper.
One of the biggest reasons I value prediction markets is their ability to help individuals and businesses hedge real financial risks. For example, Ive used these markets to offset uncertainties tied to election outcomes that could impact my investments or tax planning. Small businesses, too, can hedge against policy changes or economic shifts. This isn't gambling, despite what some might say. Trading on these platforms requires research and judgment about real-world events, much like trading stocks or commodities. Categorizing it as "gaming" would be a mistake and ignores the legitimate economic purpose it serves, like hedging and price discovery.
Im aware of concerns about insider trading or manipulation, and I get why those are issues. But banning or over-restricting prediction markets isn't the answer. Laws already exist to prevent federal employees and others from trading on nonpublic information, and the CFTC has tools to combat manipulation in any regulated market. Shutting down these platforms to stop a few bad actors would punish the rest of us who use them responsibly. It would also push activity to unregulated offshore alternatives, which are far riskier for consumers. Regulation, not prohibition, is the way to protect people.
Regarding some of the specific questions in the ANPR, Id like to address Question 7 on balancing innovation and consumer protection, and Question 15 on defining gaming versus legitimate markets. I believe the U.S. should lead in financial innovation by fostering regulated prediction markets, not ceding ground to other countries. And as I mentioned, event contracts aren't gambling; they have clear economic value. I urge the CFTC to create proportionate rules that address specific risks without broad bans.
In closing, I ask that you support the development of prediction markets with sensible regulation. They provide critical tools for forecasting, hedging, and informed decision-making. Please dont let overblown fears lead to restrictions that hurt regular traders like me and push innovation overseas.
Sincerely,
Jonathan Montes
