Comment Text:
Dear Chairman and Commissioners,
My name is Derin Carr, and I'm a student and academic based in California. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for proportionate regulation of these markets. As someone who actively trades on platforms like Kalshi, I've seen firsthand the value they provide, and I believe the CFTC has an opportunity to foster innovation while protecting consumers.
Prediction markets aren't just a hobby for me; they're a tool for understanding the world. I've used platforms like Kalshi to trade on election outcomes and other public events, and I'm consistently impressed by how much more accurate their forecasts are compared to polls or pundits. This isn't speculation or gambling. It takes research and critical thinking, much like investing in stocks. Classifying event contracts as "gaming," as discussed in Questions 15-22, ignores their real economic purpose. They aggregate information in a way that benefits everyone, not just traders, by providing better data for public decision-making and price discovery.
I also value the ability to hedge personal financial risks. As a student, I'm not running a business, but I can still see how outcomes like elections or economic policy changes might affect my future job prospects or student loan rates. Prediction markets give me, and others, a way to manage that uncertainty. This hedging utility, raised in Questions 7-14 on public interest, is a legitimate use case that shouldn't be stifled by overly restrictive rules.
I'm not blind to the risks, though. Concerns about manipulation or insider trading, as covered in Questions 29-32, are valid. But the CFTC already has robust tools to address these issues in other derivatives markets. Those same tools can work here. Banning or over-restricting prediction markets doesn't solve the problem; it just pushes activity to unregulated offshore platforms where there's no oversight at all. I'd much rather trade on a regulated U.S. market like Kalshi than take my chances with a shady foreign site. Regulation, not prohibition, is the answer to consumer protection.
Finally, I believe the U.S. should lead in financial innovation. As an academic, I'm excited by the research potential of prediction markets, and I've read studies showing their forecasting power. If we over-regulate or ban these markets, as hinted at in Questions 33-40 on classification and costs, we risk ceding ground to other countries. Let's not let that happen. I urge the CFTC to craft rules that support innovation while addressing specific risks with targeted measures.
Thank you for considering my input. I strongly encourage the Commission to support well-regulated prediction markets and avoid broad bans or restrictions that would harm users like me and the broader public.
Sincerely,
Derin Carr
