Comment Text:
Dear Chairman and Commissioners,
My name is Timothy Winslow, and I am a lawyer based in Illinois. I am writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. As someone who has used prediction markets on a few occasions, I strongly support the development of a well-regulated framework for these markets, and I urge the CFTC to avoid overly restrictive or categorical bans on event contracts.
I believe prediction markets serve a vital purpose in producing accurate forecasts for elections, legislation, regulatory outcomes, and geopolitical events. In my experience, the aggregated, crowd-sourced probabilities these markets generate often outperform traditional polls and pundit analyses. This isn't just useful for traders like me; it provides valuable information to the public, policymakers, and media. These probabilities act as political commentary, public forecasting, and collective analysis, functioning as a form of informational signal that benefits society at large.
Beyond their forecasting value, I view participation in prediction markets as a fundamental freedom. These platforms allow ordinary citizens to engage with public events in a meaningful way, and they should not be restricted to large institutions. Democratized access ensures that the information generated is more diverse and accurate. Moreover, I firmly reject the notion that event contracts constitute gambling. Trading on these markets requires research and judgment about real-world events, much like investing in stocks or commodities. The presence of money does not transform an activity into gaming when it serves clear economic purposes like price discovery and hedging.
As a lawyer, I also see a First Amendment dimension to this issue. Prediction markets are, at their core, a form of expression. They allow individuals to express probabilistic beliefs about political and public outcomes through their trades. Under Citizens United, the Supreme Court made clear that the government cannot restrict channels of political information simply because they are influential or unconventional, nor does the involvement of money strip an activity of constitutional protection when it is fundamentally expressive. I believe spending money to participate in a prediction market is akin to spending on political ads, a protected act that facilitates speech.
Turning to specific questions in the ANPR, I encourage the CFTC to consider Question 7 on balancing innovation with consumer protection. The answer lies in targeted regulation, not prohibition. On Question 15, regarding the definition of gaming, I urge the Commission to distinguish event contracts from gambling based on their economic utility. Finally, on Question 29 concerning inside information, I believe existing laws already prohibit insider trading by federal employees and others, and the CFTC should enforce these rather than banning entire markets.
I respectfully ask the CFTC to support proportionate regulation of prediction markets. These platforms offer unique societal benefits through accurate forecasting and democratic participation. Please ensure they can continue to operate under a fair and balanced regulatory framework.
Sincerely,
Timothy Winslow
