Comment Text:
Dear Chairman and Commissioners,
My name is Avi Thaker, and I'm a trader and investor based in California. I run a quant fund, and I've been actively trading on prediction markets like Kalshi and Polymarket for some time now. 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. I believe they provide immense value, both to me personally and to society at large, and I urge the CFTC to foster their growth rather than restrict them.
Prediction markets have been a critical tool for my work. For instance, during the 2024 election cycle, I was trying to hedge risks tied to potential policy shifts that could impact equity markets. Without direct access to election outcome contracts, I had to rely on indirect expressions through other instruments, which was far less precise. You can see some of the analysis I did on this at my GitHub repository (https://github.com/athaker/econ_136/tree/master/2024). Being able to trade directly on platforms like Kalshi allows me to hedge real financial risks tied to public events, whether it's an election affecting tax policy or a Fed decision impacting interest rates. This isn't gambling; it's a legitimate economic activity, no different from using futures to hedge commodity price risks.
I also see broader benefits. Prediction markets consistently outperform polls and pundits in forecasting outcomes of elections and other public events. That kind of accurate, aggregated information isn't just useful to traders like me; it helps everyone, from policymakers to regular citizens, make better decisions. Plus, faster price discovery reduces the window for manipulation and democratizes access to valuable insights. If we limit these markets or ban certain contracts by misclassifying them as "gaming," we lose that edge. Informed trading, even by those with strong knowledge, improves price discovery for all participants, not just a select few.
I'm also concerned about competitiveness. The US should be leading in financial innovation, not lagging behind. If we over-restrict prediction markets, activity will just move to unregulated offshore platforms, which are far riskier for consumers. Regulated markets like Kalshi, under CFTC oversight, are the safer option by a mile. Banning or stifling these markets doesn't solve problems; it pushes them out of reach of proper supervision.
On specific points in the ANPR, Id like to address Questions 7 and 8 under Public Interest. Prediction markets serve the public good through better forecasting and risk management, and they should be balanced with consumer protections through targeted rules, not broad prohibitions. On Questions 15 and 16 under Listed Activities, I strongly argue that event contracts are not gaming; they serve real economic purposes like hedging and price discovery. And on Question 29 under Inside Information, I believe informed trading enhances market accuracy and benefits all participants, as long as existing laws against insider trading are enforced.
I ask the CFTC to support proportionate regulation that addresses specific risks without banning or over-restricting prediction markets. Let's keep the US at the forefront of financial innovation and ensure these valuable tools remain accessible under proper oversight.
Sincerely,
Avi Thaker
