Comment Text:
Dear Chairman and Commissioners,
My name is Lucas Pauker, and I'm a trader and investor based in Illinois. I'm writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I actively trade on platforms like Kalshi, and I strongly support the development of well-regulated prediction markets in the United States. They offer unique value to individuals like me, as well as to society at large, and I urge the CFTC to craft rules that foster innovation while addressing legitimate risks.
The value of prediction markets lies in their ability to generate accurate, real-time information. Market-based forecasts consistently outperform polls and pundit commentary because they aggregate diverse views, incentives, and new data into a single price signal. For participants like me, these markets are not about gambling, but about informed judgment. They function similarly to other derivatives markets by enabling price discovery and, in some cases, hedging against real-world risks. Treating event contracts as equivalent to gaming overlooks their economic and informational value.
There is also a meaningful competitiveness issue at stake. The United States is currently a leader in regulated prediction markets, with platforms operating under oversight that promotes transparency and accountability. Overly restrictive regulation would not eliminate demand. It would push activity toward offshore or unregulated venues, where consumer protections are weaker and market integrity is harder to ensure. A balanced regulatory approach would preserve U.S. leadership in financial innovation while maintaining appropriate safeguards.
Compared to alternatives such as sportsbooks or informal markets, regulated prediction platforms offer a more transparent and fair environment. Pricing is continuous, positions are visible, and participants operate within a defined legal and supervisory framework. These features make regulated prediction markets a safer and more informative option for participants.
Concerns about manipulation, insider activity, or contracts that may conflict with the public interest are valid. However, these risks are not unique to prediction markets and are already addressed through existing regulatory tools. Targeted enforcement and clearly defined rules are more effective than broad restrictions that limit legitimate participation and innovation.
Prediction markets expand access to useful information and allow individuals, not just institutions, to engage with and interpret expectations about future events. Regulation should aim to preserve these benefits while addressing specific, identifiable risks.
For these reasons, I encourage the Commission to pursue proportionate, targeted regulation that supports the continued development of prediction markets in the United States.
Sincerely,
Lucas Pauker
