Comment Text:
Dear Chairman and Commissioners,
My name is Kimberly Grey, and I'm a trader and investor based in New York. I've used prediction markets like Kalshi a few times, mainly for sports and public event forecasting, and I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support the CFTC crafting proportionate regulations for these markets rather than imposing broad bans or overly restrictive rules.
I believe prediction markets are a powerful tool for society. They've consistently produced more accurate forecasts for elections and other public events than polls or pundits. This kind of data transparency is critical at a time when trust in traditional institutions is at an all-time low. Academic research backs this up, showing how these markets aggregate information efficiently. For me, platforms like Kalshi aren't just about trading; they're about accessing insights I can't get elsewhere. And with innovators like Elon Musk shaping the future of platforms like X, alongside concepts like DAOs, prediction markets could become essential for public voting and governance transparency. If the U.S. doesn't lead in this financial innovation, other countries will step in and take the reins. We can't afford to fall behind.
That said, I do have serious concerns about certain aspects, especially around financial securities and earnings calls on platforms like Kalshi. As someone married to a spouse at a regulated financial firm, I'm hyper-aware of the risks of material non-public information (MNPI) and insider trading. I worry that insider scripts or keywords from investor relations could leak into these markets. That's why I've limited myself to sports betting on Kalshi and steer clear of anything tied to earnings or securities. Strong CFTC oversight is non-negotiable for me. Just as firms like Fidelity duplicate transactions to compliant channels for monitoring, Kalshi must establish similar compliance mechanisms with broker-dealers, feeding duplicate statements for oversight. Without this, I fear entire groups, like those with family in finance or crypto, might be forced to avoid these platforms altogether.
Addressing specific questions in the ANPR, like those in Topic B on public interest (Questions 7-14), I urge the CFTC to balance innovation with consumer protection by focusing on targeted rules rather than categorical bans. On Topic E regarding inside information (Questions 29-32), I believe the answer isn't to shut down markets but to enforce existing laws against insider trading and ensure robust monitoring. Prediction markets aren't gambling; they're a legitimate tool for forecasting and hedging. Let's regulate the real risks without punishing everyone.
I ask the CFTC to support well-regulated prediction markets with proportionate rules that keep the U.S. at the forefront of financial innovation. Thank you for considering my perspective.
Sincerely,
Kimberly Grey
