Comment Text:
Dear Chairman and Commissioners,
My name is Yizhou Liu, and I'm a software engineer based in California. I work in tech, where data and accurate forecasting are critical to decision-making, and Ive personally used prediction markets to hedge financial risks tied to public events like elections and economic policy changes. Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for well-regulated prediction markets. I believe they provide unique value to individuals like me, businesses, and society as a whole.
As someone who relies on data to navigate uncertainty, Ive found prediction markets to be an unparalleled tool for getting information that polls and pundits often miss. Their track record of accuracy on election outcomes and other public events is impressive, and that benefits everyone, not just traders. Ive used platforms like Kalshi to hedge personal financial risks, such as potential tax changes or regulatory shifts that could impact my income or investments. This isnt gambling; its a practical way to manage real-world uncertainty, much like buying insurance or trading stocks. Classifying event contracts as "gaming" (as raised in Questions 15-22) ignores their legitimate economic purpose of price discovery and risk management.
I also value the freedom to participate in legal, regulated markets. Banning or over-restricting prediction markets, as some might suggest, would push activity to unregulated offshore platforms where theres no consumer protection. Id much rather trade on a CFTC-registered platform like Kalshi, under your oversight, than take risks on shady foreign sites. On this point, I urge you to consider Question 7 about balancing innovation with consumer protection. Regulated markets are the safer choice, and the US should lead in financial innovation rather than cede that ground to other countries.
Im aware of concerns about manipulation or insider trading (as in Questions 29-32), but I believe the CFTC already has strong tools to address these issues, just as you do for other derivatives. Informed trading actually improves price discovery, which helps all participants. Instead of broad bans, I support targeted, proportionate regulation to tackle specific risks. Shutting down entire markets to stop a few bad actors punishes honest users like me and limits the publics access to better information.
Academic research also backs this up, showing prediction markets aggregate information efficiently. Thats not just good for traders; its good for public decision-making. I hope youll consider these points and craft rules that support innovation while protecting consumers. Please dont over-restrict or ban prediction markets. Allow them to thrive under fair, balanced regulation.
Thank you for considering my input.
Sincerely,
Yizhou Liu
