Comment Text:
Dear Chairman and Commissioners,
My name is Jeff McCoy, and I'm a finance professional from Arkansas. I'm writing to express my strong support for the proportionate regulation of prediction markets as outlined in the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I've been actively trading on platforms like Kalshi for a while now, and I believe these markets provide immense value, both to me personally and to society at large.
As someone in finance, I rely on prediction markets to gauge economic sentiment, particularly around federal rate decisions and election outcomes. These markets often give me insights that I can't find in polls or pundit commentary. I've seen firsthand how their forecasts are consistently more accurate than traditional sources. For instance, during the last election cycle, the odds on Kalshi helped me better understand potential policy shifts that could impact my clients' investments. This isn't just useful for traders like me; its valuable information for the public and even policymakers who need reliable data to make decisions.
Beyond forecasting, prediction markets allow me to hedge real financial risks. Federal rate changes affect everything from mortgage rates to business loans I advise on. Being able to trade contracts tied to these events helps me manage uncertainty in a way that traditional investments can't always match. This isn't gambling, despite what some might claim. It takes research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" would ignore their legitimate economic purpose, and I urge the CFTC to recognize this distinction when addressing questions like 15 and 16 in the ANPR about defining gaming versus legitimate markets.
I also want to stress the importance of regulated platforms like Kalshi over unregulated offshore alternatives. I've looked at some of those offshore sites, and they're a mess, with no oversight or consumer protections. Keeping prediction markets under CFTC supervision ensures transparency and safety for participants like me. Banning or over-restricting these markets would just push activity to those riskier venues, which helps no one. This ties directly to questions 7 and 8 in the ANPR about balancing innovation with consumer protection, and I believe regulation, not prohibition, is the answer.
I do understand concerns about manipulation or insider trading, but the CFTC already has tools to address these issues. Laws against insider trading apply to federal employees and others with nonpublic information, and your existing authority to combat market manipulation is robust. Shutting down or severely limiting prediction markets to stop a few bad actors would punish honest participants and stifle valuable price discovery.
I'm asking the CFTC to support well-regulated prediction markets with rules that address specific risks without broad bans. These markets democratize information, help hedge real risks, and provide better forecasts than many alternatives. Let's keep them accessible and safe under your oversight.
Sincerely,
Jeff McCoy
