Comment Text:
Dear Chairman and Commissioners,
My name is Samuel Lopez, and I'm a trader and investor based in Arizona. 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 the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I believe these markets provide unique value to people like me and to society as a whole, and I urge the CFTC to craft rules that allow them to thrive under fair oversight.
As a trader, Ive seen firsthand how prediction markets offer insights you cant get anywhere else. The prices reflect a collective judgment that often beats out polls or expert opinions. This isnt just helpful for those of us trading; its useful for anyone trying to understand whats likely to happen, whether its an election outcome or an economic indicator. Ive relied on these markets to make better decisions about my investments, especially when hedging risks tied to political or policy changes that could impact my portfolio. For instance, trading on election outcomes has helped me gauge potential tax policy shifts that affect my long-term planning.
I want to address a couple of key points. First, I strongly believe event contracts are not gambling. They serve real economic purposes like price discovery and risk management. Trading on these platforms requires research and analysis, just like trading stocks or commodities. Its about assessing real-world probabilities, not rolling dice. Second, Im a big believer in the academic research behind prediction markets. Studies by economists like Justin Wolfers and Eric Zitzewitz show these markets aggregate information efficiently, often outperforming traditional forecasting methods. That data transparency benefits everyone, not just traders. And finally, informed trading isnt a problem; its a strength. When knowledgeable participants trade, they improve price accuracy, which helps all market participants make better decisions. Banning or over-restricting these markets because of fears about insider trading would be a mistake. The CFTC already has tools to tackle manipulation and illegal activity. Use those instead of punishing the majority who trade in good faith.
Id like to touch on a few of the CFTCs specific questions. On Question 7 under Public Interest, I believe prediction markets clearly serve the public by providing transparent, data-driven insights. On Question 29 regarding inside information, I argue that informed trading often enhances price discovery, as long as existing laws against insider trading are enforced. And on Question 15 about defining gaming, I urge the CFTC to recognize that event contracts are distinct from gambling due to their economic utility.
I ask the CFTC to support proportionate regulation of prediction markets. Dont ban or overly restrict them. Create rules that address specific risks while allowing these valuable tools to grow. Thank you for considering my perspective.
Sincerely,
Samuel Lopez
