Comment Text:
Dear Chairman and Commissioners,
My name is Michael Malchek, and I'm a trader and investor based in Wisconsin. I've been actively trading on prediction markets like Kalshi for a while now, and I'm writing to express my strong support for well-regulated prediction markets in response to your Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets provide real value to people like me, and I want to share my perspective on why the CFTC should regulate them proportionately rather than restrict or ban them.
As someone who trades regularly, I see prediction markets as a unique tool. They're not just a way to make a profit; they give me insights into events that affect my life and investments, from economic data releases to political outcomes. The prices often seem more accurate than what I hear from pundits or read in polls. I don't think of this as gambling at all. It takes research and judgment, just like trading stocks or commodities. Classifying event contracts as "gaming" feels wrong to me because they serve legitimate economic purposes, like price discovery and hedging against uncertainty. I urge the CFTC to consider this distinction when addressing questions 15-22 on listed activities.
I'm also a big believer in the importance of regulation. Platforms like Kalshi, which operate under CFTC oversight, are far safer than the unregulated offshore alternatives out there. If the CFTC over-restricts or bans these markets, I worry that traders like me will be pushed to less secure venues with no consumer protections. Regulation should keep us safe, not drive us away. This ties directly to questions 7-14 on public interest, where I think the balance between innovation and protection clearly favors regulated markets over prohibition.
On the topic of data and research, I've read about academic studies showing how prediction markets aggregate information efficiently. That transparency benefits everyone, not just traders. It would be a shame to lose that by over-regulating. And while I'm on the subject of contracts, I'd love to see more variety in what's offered, especially for sports events. Right now, on many platforms, you can only bet on winners for most games. Why not expand to spreads and over/unders for all kinds of sports, like Japanese Baseball or German Basketball? More options would make these markets even more useful and engaging for regular folks like me.
I understand there are concerns about manipulation or insider trading, but I believe the CFTC already has tools to handle those issues. Banning entire categories of contracts or markets to stop a few bad actors punishes honest traders. Instead, focus on enforcing existing laws and tailoring rules to specific risks. I'm looking at questions 29-32 on inside information, and I think informed trading often improves price accuracy, as long as it's not illegal insider activity.
In closing, I ask the CFTC to support proportionate regulation of prediction markets. Don't over-restrict or ban them. Keep platforms like Kalshi accessible and safe for traders like me. Thank you for considering my input.
Sincerely,
Michael Malchek
