Comment Text:
Dear Chairman and Commissioners,
My name is Jeremy Nepomuceno, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi for a while now, and I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I strongly support the development of well-regulated prediction markets in the United States, and I want to share why I think they're valuable, both for me personally and for society as a whole.
As a trader, I rely on accurate information to make decisions, and prediction markets have consistently provided forecasts that beat out polls and pundits. Whether it's an election outcome or a major public event, the aggregated wisdom in these markets often cuts through the noise. This isn't just helpful for those of us trading; its valuable for anyone who needs reliable signals, from policymakers to regular citizens. I also use these markets to hedge personal financial risks. For example, trading on election outcomes helps me offset potential impacts on my investments tied to policy changes. This kind of hedging isn't gambling. Its a practical tool, much like any other derivative market.
Im all for consumer protection, but I believe the answer is targeted regulation, not broad bans. The CFTC already has strong tools to tackle manipulation and insider trading in other markets, and those can be applied here too. Over-restricting or banning prediction markets would just push activity to unregulated offshore platforms, which are far riskier. Id much rather trade on a regulated platform like Kalshi, where theres oversight, than be forced into shadier alternatives. On a related note, I dont think event contracts should be labeled as gaming. They serve real economic purposes like hedging and price discovery, just as stock or commodity markets do.
I also want to touch on a couple of specific questions from the ANPR. Regarding Question 7 under Public Interest, I believe prediction markets balance innovation and protection when regulated properly. They drive better decision-making through price discovery, and the U.S. should lead in this space rather than cede ground to other countries. As for Question 15 under Listed Activities, classifying these contracts as gaming ignores their legitimate uses and risks stifling a useful financial tool.
Prediction markets arent perfect, and I get the concerns about manipulation or insider trading. But shutting them down or over-regulating them punishes honest participants like me. Informed trading actually improves price discovery, benefiting everyone in the market. Lets focus on enforcing existing laws and crafting proportionate rules instead of broad restrictions.
I urge the CFTC to support the growth of regulated prediction markets with a framework that addresses specific risks without killing innovation. These markets are too valuable to lose.
Sincerely,
Jeremy Nepomuceno
