Comment Text:
Dear Chairman and Commissioners,
I'm writing to provide input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. My name is Matthew Sokol, a retail trader and investor based in New York. I've been actively trading on Kalshi, a CFTC-regulated prediction market, for several months, and I want to share why I strongly support well-regulated prediction markets and why I believe the CFTC should focus on proportionate rules that protect consumers while preserving access and innovation.
As a trader, I find prediction markets invaluable for gaining insights that I can't get from polls or pundits. I've seen firsthand how Kalshi's prices on elections and economic events often predict outcomes more accurately than traditional forecasts. This isn't just useful for me as a trader; it's information that benefits journalists, researchers, and even policymakers who can use these aggregated forecasts for better decision-making. I also use these markets to hedge personal risks, like potential policy changes that could impact my investments or taxes. This isn't gambling. It takes research and real-world judgment, much like trading stocks or commodities.
What gives me confidence in Kalshi is the CFTC's oversight. Their rules ensure position limits, identity verification, and fair settlement based on clear outcomes. I trust my money there far more than I would on some offshore platform with no accountability. If the U.S. over-restricts these markets, whether by excluding retail traders like me or limiting the events we can trade on, I worry activity will just shift to unregulated overseas sites. Thats worse for consumer protection, not better. The U.S. should lead in financial innovation, not push it elsewhere.
Im particularly concerned about ideas that might restrict retail access or classify event contracts as gaming. Regarding questions 7 and 15 from the ANPR, on public interest and defining gaming, I believe prediction markets serve a clear economic purpose through price discovery and hedging. Calling them gaming ignores their real value and could unfairly limit their scope. On question 29 about inside information, I think informed trading actually improves price accuracy, benefiting everyone. Insider trading is already illegal, and the CFTC has tools to enforce against manipulation. Banning or over-restricting markets to stop a few bad actors punishes legitimate users like me.
I also want to highlight an operational issue I've faced as an API-using trader on Kalshi. There are inconsistencies in API access and fee structures that sometimes lead to small but frustrating losses, with limited recourse. Clearer regulatory standards for exchange transparency and dispute resolution, as touched on in questions 1 and 23, would help retail traders like me without burdening responsible platforms.
In closing, I urge the CFTC to support proportionate regulation that maintains retail access, allows a wide range of well-defined event contracts, and focuses on consumer protection and operational integrity. Prediction markets provide unique public benefits, and the U.S. should foster them under a smart regulatory framework, not restrict them. Thank you for considering my views.
Respectfully,
Matthew Sokol
