Comment Text:
Dear Chairman and Commissioners,
My name is Dan Brownell, and I'm a trader and investor based in New York. I've been actively trading on prediction markets like Kalshi for a while now, and Im 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, and I want to share why I believe theyre valuable for people like me, as well as for society at large.
As a trader, Ive seen firsthand how prediction markets provide information thats just not available anywhere else. Their forecasts on elections and other public events consistently beat out polls and pundits. That accuracy isnt just helpful for those of us trading; its a public good that can inform better decision-making for everyone, from policymakers to regular citizens. Beyond forecasting, I use these markets to hedge real financial risks tied to my investments. For instance, trading on outcomes like Federal Reserve decisions or inflation data helps me offset uncertainties that directly impact my portfolio. This isnt gambling. Its a calculated process based on research and judgment, much like trading stocks or commodities. Classifying event contracts as "gaming" would be a misstep, as they serve genuine economic purposes like price discovery and risk management.
I also believe that regulated platforms like Kalshi are far safer than the alternative. If the CFTC over-restricts or bans these markets, activity will just move to unregulated offshore sites where theres no oversight or consumer protection. Id much rather trade in a system where the CFTC can step in if something goes wrong. On that note, I know there are concerns about manipulation or insider trading, but the CFTC already has strong tools to address these issues in other derivatives markets. Those same tools can work here. Banning entire categories of contracts to stop a few bad actors punishes law-abiding traders like me and pushes innovation out of the U.S. We should be leading in financial innovation, not ceding ground to other countries.
Id like to address a few specific questions from the ANPR. On Question 7 under Public Interest, I believe prediction markets strike a balance between innovation and protection when regulated properly, as they democratize access to unique information. On Question 15 under Listed Activities, I urge the CFTC to avoid labeling event contracts as gaming, since theyre grounded in real-world economic utility. And on Question 33 under Classification, I support a framework that treats these contracts as legitimate derivatives, not something to be overly restricted.
In closing, I ask the CFTC to adopt proportionate, targeted regulations for prediction markets rather than broad bans or harsh restrictions. Lets keep these markets accessible, safe, and innovative right here in the U.S. Thank you for considering my input.
Sincerely,
Dan Brownell
