Comment Text:
Dear Chairman and Commissioners,
My name is Drew Houfley, and I'm a student from Michigan with a strong interest in economics and public policy. I'm writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I actively trade on regulated prediction markets like Kalshi, and I believe these platforms offer real value to society. I want to share why I support well-regulated prediction markets and urge the CFTC to craft rules that encourage innovation while protecting participants.
As a student, I rely on accurate information to understand the world, whether it's for a research paper or just to make sense of current events. Prediction markets have consistently provided better forecasts than polls or pundits. I've seen firsthand how the aggregated wisdom of traders on platforms like Kalshi often predicts election outcomes or economic trends more accurately than traditional sources. This isn't just useful for me; it's valuable for everyone, from policymakers to everyday citizens, who benefit from better price discovery and transparent information. I think this relates directly to your questions 7 and 8 in the ANPR about the public interest and price discovery benefits of these markets.
I also value the freedom to participate in legal, regulated markets. Platforms like Kalshi operate under CFTC oversight, which makes them far safer than unregulated offshore alternatives. If the CFTC over-restricts or bans certain event contracts, I worry that activity will just shift to less secure venues where there's no consumer protection at all. I've traded on Kalshi to hedge small risks, like election outcomes that might affect student loan policies, and I feel much more confident doing so in a regulated space. This ties into your questions 11 and 12 about balancing innovation with protection, and I believe regulation, not prohibition, is the answer.
Finally, I think the US should be a leader in financial innovation. If we clamp down too hard on prediction markets, we risk ceding this space to other countries. Informed trading, even by those with unique insights, improves price discovery and benefits all participants, as long as it's within the bounds of existing laws against insider trading. This speaks to your questions 29 and 30 on inside information, and I believe the CFTC's current tools can address bad actors without shutting down entire markets.
I'm not blind to the risks. Manipulation or misinformation could distort prices, but the CFTC already has authority to tackle those issues. Banning broad categories of contracts punishes honest participants like me and pushes activity offshore. I urge you to support proportionate regulation that allows prediction markets to thrive while addressing specific concerns with targeted rules.
Thank you for considering my input.
Sincerely,
Drew Houfley
