Comment Text:
Dear Chairman and Commissioners,
My name is Axel Barajas, and I'm a trader and investor based in Georgia. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I'm relatively new to prediction markets, but I strongly support their development under fair and balanced regulation. As someone who spends a lot of time analyzing markets and making informed decisions, I see real value in these platforms, and I want to share why I think the CFTC should encourage them with the right oversight.
Prediction markets aren't just a niche hobby. They provide better information for public decision-making by aggregating insights from many participants, often outperforming polls or expert opinions. For me, as a trader, the price discovery aspect is huge. These markets offer unique data points I can't get anywhere else, helping me understand trends and events that impact my investments. I believe this benefit extends beyond traders like me to the broader public, journalists, and even policymakers who can use this information to make smarter choices.
I also want to address a common misconception. Event contracts are not gambling. They serve real economic purposes, like hedging risks or gaining insight into future outcomes. When I trade, whether it's stocks or commodities, I'm using research and judgment about real-world events. Prediction markets are no different. Labeling them as "gaming" undermines their legitimacy and ignores the skills and analysis involved.
I'm not blind to the risks, though. There are concerns about manipulation or insider trading, and those need to be addressed. But I believe proportionate, targeted regulation is the answer, not broad categorical bans. Shutting down entire categories of contracts punishes everyone for the actions of a few bad actors. The CFTC already has tools to combat fraud and manipulation in other markets, and those can be adapted here. I also think informed trading actually improves price discovery. When knowledgeable participants trade, it makes the market's predictions more accurate, which helps everyone, not just the traders.
One more thing I care about is safety. Regulated markets, like Kalshi operating under CFTC oversight, are far better than unregulated offshore platforms. If we over-restrict or ban these markets, people will just go elsewhere, to places with no protections. That's a worse outcome for everyone. In response to Questions 7 and 15 from the ANPR, I urge you to prioritize innovation and public interest by focusing on specific risks rather than sweeping prohibitions, and to define event contracts in a way that recognizes their economic value.
I respectfully ask the CFTC to support the growth of prediction markets with sensible, targeted regulations. Don't let overregulation or bans stifle a tool that can benefit so many. Thank you for considering my perspective.
Sincerely,
Axel Barajas
