Comment Text:
Dear Chairman and Commissioners,
My name is Sai Karthik Munagala, and I'm a trader and investor based in Texas. I've been actively trading on prediction markets like Kalshi for a while now, and I'm writing to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I strongly support the development of well-regulated prediction markets, and I hope the CFTC will craft rules that encourage innovation while addressing real risks.
As someone who trades regularly, I've seen firsthand how prediction markets provide information that's just not available elsewhere. Whether it's an election outcome or a major public event, the prices on these platforms often predict results more accurately than polls or pundits. I rely on this data to make better decisions, not just in trading but in understanding the world around me. This isn't just helpful for traders like me; it's valuable for the public, media, and even policymakers who need reliable insights. I believe this ties directly to your questions in Topic Area B, specifically Question 7, on how these markets serve the public interest through price discovery.
I also want to stress that event contracts shouldn't be lumped in with gaming. Trading on these markets requires research and judgment about real-world events, much like trading stocks or commodities. It's a legitimate economic activity with purposes like hedging and forecasting, not a game of chance. Classifying it as gaming would be a mistake, and I hope the CFTC considers this when addressing Question 15 in Topic Area C about defining gaming versus legitimate markets.
Another point I feel strongly about is the freedom to participate in legal, regulated markets. Platforms like Kalshi, operating under CFTC oversight, give regular folks like me a chance to engage in these markets safely. If we over-restrict or ban them, activity will just move to unregulated offshore sites, which helps no one. On top of that, the US has a chance to lead in financial innovation here. We shouldn't cede that to other countries by being overly cautious. This connects to your broader questions in Topic Area B about balancing innovation and consumer protection.
Finally, I want to touch on informed trading. Some worry about insiders, but I believe traders with good information actually improve price discovery, which benefits everyone in the market. The CFTC already has tools to tackle manipulation and insider trading, as discussed in Topic Area E, Questions 29 and 30. Let's not punish all participants by restricting these markets; instead, focus on enforcing existing laws against bad actors.
I'm asking the CFTC to support proportionate regulation of prediction markets. Please don't ban or over-restrict them. Craft rules that address specific risks while allowing these valuable tools to thrive for traders like me and the broader public.
Thank you for considering my input.
Sincerely,
Sai Karthik Munagala
