Comment Text:
Dear Chairman and Commissioners,
My name is Roark Lacey, and I'm a finance and data science student based in New York. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, published in 91 FR 12516. As someone actively studying and working in finance, I strongly support the development of well-regulated prediction markets, and I want to share why I believe they are a valuable addition to the global marketplace.
I've been trading on platforms like Kalshi, a CFTC-registered market, and I've seen firsthand how prediction markets provide insights you can't get from polls or pundits. For elections and other public events, the aggregated forecasts from these markets often cut through noise and bias, giving a clearer picture of what's likely to happen. This isn't just useful for traders like me; it helps everyone, from journalists to policymakers, make better-informed decisions. I also use these markets to hedge personal financial risks tied to economic events, like inflation data releases that impact my budgeting and investments. This isn't gambling. It takes research and judgment, much like trading stocks or futures, and serves a real economic purpose.
I'm also concerned about access and fairness. Prediction markets let regular people like me participate in price discovery, not just big institutions. If we over-restrict or ban these markets, we risk pushing activity to unregulated offshore platforms where there's no consumer protection. I've read the CFTC's questions, particularly numbers 7 and 8 under Public Interest, about balancing innovation with protection. I believe regulated markets like Kalshi are the answer. They keep activity under oversight while allowing innovation. Shutting them down would hurt U.S. competitiveness in financial innovation, something we should be leading on.
Regarding question 15 on defining "gaming" versus legitimate markets, I urge you to recognize that event contracts aren't gambling. They provide hedging and forecasting value, backed by academic research from economists like Hanson and Wolfers, who show how these markets improve information transparency. And on question 29 about inside information, I acknowledge the concern, but the answer isn't banning markets. Insider trading and manipulation are already illegal, and the CFTC has tools to enforce those rules. Punishing everyone for a few bad actors makes no sense.
I ask that the CFTC support proportionate regulation of prediction markets. Don't impose broad bans or overly restrictive rules that could stifle this valuable tool. Focus on targeted oversight to address specific risks while preserving access for everyday traders like me. Thank you for considering my perspective.
Sincerely,
Roark Lacey
