Comment Text:
Dear Chairman and Commissioners,
My name is Benito Mendoza, and I'm a student from Washington state. 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). As someone who actively trades on platforms like Kalshi, I see firsthand the value these markets provide, not just to me but to society at large. I want to share my perspective as a student and a participant in these markets.
Prediction markets are an incredible tool for generating information that you can't find anywhere else. I've seen them consistently outperform polls and pundits when it comes to forecasting events like elections or economic indicators. This isn't just useful for traders; it's valuable for everyone, from journalists to policymakers, who can use these insights to make better decisions. As a student, I also appreciate the academic side. There's a wealth of research showing how these markets aggregate information efficiently, and I believe the CFTC should encourage data transparency and collaboration with researchers to further study their impact.
I also use prediction markets to hedge real risks in my own life. For example, I've traded on contracts related to economic data releases that could affect my student loan interest rates or part-time job prospects. This isn't gambling; it's a practical way to manage uncertainty. I know businesses do the same, hedging against policy changes or regulatory shifts. Labeling event contracts as "gaming" ignores their legitimate economic purpose. Trading on these platforms requires research and judgment, much like investing in stocks or futures. Its not a game of chance, and it shouldn't be treated as one.
I'm also concerned about freedom to participate in legal, regulated markets. As a regular person, not a big institution, I value having access to these tools. If only large players are allowed in, the information and benefits stay locked away from everyday people like me. And on the topic of informed trading, I believe it improves price discovery. When knowledgeable traders participate, the market prices get more accurate, which helps everyone, not just those trading.
Id like to address a couple of specific questions from the ANPR. On Question 15, regarding defining gaming versus legitimate markets, I urge the CFTC to recognize event contracts as economic tools, not gambling, based on their role in hedging and price discovery. On Question 29, about inside information, I think informed trading often benefits the market by making prices more accurate, and existing laws already prohibit misuse of nonpublic information. The focus should be on enforcing those rules, not restricting entire markets.
I understand concerns about manipulation or insider trading, but the CFTC already has powerful tools to address those issues. Banning or over-restricting prediction markets punishes honest participants and pushes activity to unregulated offshore platforms, which is worse for everyone.
Please support proportionate regulation that allows prediction markets to thrive while addressing specific risks with targeted rules. Don't ban or overly restrict them. Thank you for considering my views.
Sincerely,
Benito Mendoza
