Comment Text:
Dear Chairman and Commissioners,
My name is Sebastian Francisco, and Im a trader and investor based in Indiana. Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. Ive used prediction markets a few times myself, and I strongly support their continued operation under fair and proportionate regulation. I believe these markets provide unique value for individuals like me, as well as for businesses and the broader public.
As someone who trades and invests, I see prediction markets as a powerful tool for hedging real financial risks. For instance, Ive used these platforms to offset potential losses tied to economic policy changes that could impact my portfolio. Just like futures or options help manage uncertainty in commodities or stocks, event contracts let me protect myself against outcomes like shifts in interest rates or election results that could affect my taxes or investments. This isnt gambling, its a practical way to manage exposure. I know small businesses in my area could benefit similarly, hedging against regulatory or political changes that might hit their bottom line.
Beyond personal use, I think prediction markets offer better information for everyone. The prices on these platforms often cut through the noise of pundits and polls, giving a clearer picture of whats likely to happen. Thats not just useful for traders, its valuable for the public and even policymakers who need accurate signals to make decisions. Ive seen firsthand how these markets can aggregate insights you cant find anywhere else.
I also want to address the idea of classifying event contracts as gaming, which I see raised in Questions 15-22 of the ANPR. These contracts arent about luck or entertainment, theyre about research and judgment, much like any other investment. Treating them as gambling would ignore their legitimate economic purpose, whether its price discovery or risk management. I urge the CFTC to recognize this distinction and avoid overly broad restrictions.
As for concerns about manipulation or insider trading, mentioned in Questions 29-32, I get that there are risks. But those issues are already illegal under existing laws, and the CFTC has the authority to enforce against bad actors. Shutting down or over-restricting prediction markets to stop a few cheaters would hurt honest participants like me. Instead, focus on using the tools you already have to keep these markets fair.
Im asking the CFTC to support well-regulated prediction markets with rules that address specific risks without banning or stifling them. Lets keep this innovative tool accessible for individuals and businesses who rely on it for hedging and better information. Thank you for considering my perspective.
Sincerely,
Sebastian Francisco
