Comment Text:
Dear Chairman and Commissioners,
My name is Kevin Sun, and I'm a finance professional based in New York. I'm writing to express my strong support for the proportionate regulation of prediction markets in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I've used prediction markets a few times myself, and I believe they offer unique value for individuals, businesses, and society as a whole. I appreciate the CFTC seeking public input on this growing area.
As someone working in finance, I'm constantly looking for reliable data to inform decisions. Prediction markets have consistently provided forecasts on elections and public events that are more accurate than polls or pundits. This isn't just helpful for traders like me; it benefits everyone by improving public decision-making and price discovery. I also see real value in using these markets to hedge financial risks. For instance, I've considered trading on election outcomes that could impact tax policies affecting my personal investments or business interests. This isn't gambling; it's a practical tool for managing uncertainty, much like other derivatives markets.
I strongly believe event contracts shouldn't be classified as gaming. They serve legitimate economic purposes, like hedging and information aggregation, backed by solid academic research from economists like Hanson and Wolfers. Trading on these platforms requires research and judgment, not luck. I'm also concerned that banning or over-restricting prediction markets would push activity to unregulated offshore platforms, which are far riskier for consumers. Regulated markets, like Kalshi on a CFTC-registered DCM, offer transparency and oversight that protect participants. The US should be leading in financial innovation, not ceding ground to other countries by driving this activity abroad.
Addressing some of your specific questions, particularly from Topic B on Public Interest (Questions 7-14), I believe the CFTC can balance innovation with consumer protection by using its existing robust tools to combat manipulation and insider trading, rather than imposing broad categorical bans. On Topic E (Questions 29-32) regarding inside information, I think informed trading often improves price discovery, benefiting all market participants, as long as it's not based on illegal nonpublic information. The laws already in place for federal employees and others should be enforced, not replaced with outright prohibitions. Finally, on Topic C (Questions 15-22) about listed activities, the focus should be on defining clear, targeted rules for problematic contracts, not sweeping restrictions that punish legitimate users.
I urge the CFTC to adopt a proportionate approach to regulating prediction markets. Target specific risks with tailored rules, but don't ban or overly restrict these valuable tools. Let's keep the US at the forefront of financial innovation while ensuring consumer safety through regulated platforms.
Sincerely,
Kevin Sun
