Comment Text:
Dear Chairman and Commissioners,
My name is Abraham Knobloch, and I'm a trader and investor based in New York. I'm writing to comment on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I've been actively trading on platforms like Kalshi for a while now, and I want to share why I believe prediction markets are valuable and deserve thoughtful, proportionate regulation rather than heavy-handed restrictions.
As someone who spends a lot of time analyzing markets, I can tell you that prediction markets provide insights you just can't get from polls or pundits. I've seen firsthand how accurate they can be, especially for elections and major public events. Last year, I relied on Kalshi's election outcome contracts to gauge the likelihood of policy shifts that could impact my investments. The prices on these markets cut through the noise of media speculation and gave me a clearer picture. This kind of forecasting isn't just useful for traders like me; it's valuable for anyone trying to make sense of uncertain events, from business owners to everyday citizens.
I also want to push back on the idea that event contracts are gambling. They aren't. Trading on prediction markets takes research, judgment, and a real understanding of the world, much like trading stocks or commodities. More importantly, these markets serve a genuine economic purpose. I've used them to hedge risks tied to political and economic outcomes. For example, Ive placed trades to offset potential losses in my portfolio if certain tax or trade policies come into play after an election. Small businesses, importers, or even farmers could use these tools in similar ways, hedging against regulatory changes or policy risks that hit their bottom line. This isn't a game; it's a practical way to manage uncertainty.
I appreciate that the CFTC is asking for input on these issues, and I'd like to address a couple of specific questions from the ANPR. On Question 8, regarding the public interest benefits of prediction markets, I believe they clearly provide price discovery and risk management tools that benefit society, not just traders. And on Question 15, about defining gaming versus legitimate markets, I urge you to recognize that event contracts have real hedging utility and shouldn't be lumped in with gambling.
I understand there are concerns about manipulation or insider trading. But those are already illegal, and the CFTC has the authority to crack down on bad actors. Shutting down or over-restricting prediction markets to stop a few bad apples would punish the rest of us who use these tools responsibly. Please focus on enforcing existing laws instead of broad bans.
I'm asking you to support well-regulated prediction markets with rules that address specific risks without stifling innovation or access. These markets are too valuable to lose.
Sincerely,
Abraham Knobloch
