Comment Text:
Dear Chairman and Commissioners,
My name is Patrick Traeger, and I'm a trader and investor from California, currently serving as the CTO of Speed Labs, Inc. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516) to express my strong support for the proportionate regulation of prediction markets. As someone who actively trades on platforms like Kalshi, I've seen firsthand the value these markets provide, and I believe the CFTC has a chance to foster innovation while protecting consumers with the right approach.
I rely on prediction markets to hedge financial risks that impact both my personal investments and my business. For example, trading on election outcomes or economic indicators like CPI reports helps me manage uncertainties that could affect my company's tech investments or my own financial planning. This isn't gambling, it's a legitimate economic tool. Structurally, binary event contracts are no different from derivatives in options trading, which are widely accepted as serious financial instruments. Classifying event contracts as "gaming" ignores their real purpose, whether it's hedging risk or contributing to price discovery. I urge the CFTC to recognize this distinction when addressing questions like 15 and 16 on defining gaming versus legitimate market activity.
Beyond personal use, I value prediction markets for their ability to aggregate information and produce forecasts that often beat polls or pundits. As a tech professional, I appreciate how this data transparency and academic research around markets (like studies by Hanson or Wolfers) show their public benefit. Accurate pricing on elections or public events doesn't just help traders, it informs everyone. On Question 29 regarding inside information, I believe informed trading actually sharpens price discovery and benefits all participants, as long as manipulation is policed with existing CFTC tools.
I also worry about over-restriction. Banning or overly limiting these markets won't stop trading, it will just push activity to unregulated offshore platforms where theres no consumer protection. Regulated markets like Kalshi are safer, with oversight and accountability. Id rather see the US lead in financial innovation than cede ground to other countries. This ties directly to Questions 7 and 8 on balancing innovation with consumer protection. Regulation should focus on safeguarding participants without stifling a valuable tool.
I'm not blind to risks like manipulation or insider trading, but the CFTC already has authority to tackle those issues. Punishing all traders for the actions of a few bad actors makes no sense. Let's build a framework that keeps markets open and fair. I strongly encourage the CFTC to support well-regulated prediction markets and avoid broad bans or classifications that undermine their economic purpose.
Thank you for considering my perspective.
Sincerely,
Patrick Traeger
