Comment Text:
Dear Chairman and Commissioners,
My name is Alexander Sarmiento, and I'm a student from New Jersey. I'm writing to share my thoughts on the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I'm relatively new to prediction markets, but I've been studying their potential as part of my academic interests, and I strongly support their development under fair and balanced regulation.
As a student, I see prediction markets as a powerful tool for understanding the world around us. They often provide more accurate forecasts for elections and public events than traditional polls or pundits. This kind of information isn't just helpful for traders; it can improve decision-making for everyone, from policymakers to everyday citizens like me. Beyond that, I believe these markets allow individuals and businesses to hedge against real financial risks, like policy changes or economic shifts that could impact personal budgets or small enterprises. It's not gambling. It's a legitimate way to manage uncertainty, much like trading stocks or commodities based on research and judgment.
I'm also concerned about access and fairness. Prediction markets give regular people a chance to participate in financial systems that are often dominated by big institutions. If we over-restrict or ban these markets, we risk pushing activity to unregulated offshore platforms where there's no consumer protection. I'd much rather see the CFTC regulate these markets here in the US, keeping them safe and transparent while maintaining our country's leadership in financial innovation. We shouldn't cede this space to other nations.
I want to address a few specific questions from the ANPR. On Questions 7-14 under Public Interest, I believe the CFTC should prioritize balancing innovation with consumer protection by setting clear rules, not broad bans. On Questions 15-22 about Listed Activities, I urge you to avoid classifying event contracts as gaming. They serve real economic purposes like price discovery and hedging, which benefit society. And on Questions 29-32 regarding Inside Information, I think informed trading actually improves price accuracy and helps everyone, as long as existing laws against insider trading and manipulation are enforced. The CFTC already has strong tools to tackle bad actors, so there's no need for heavy-handed restrictions that punish honest participants.
I know there are risks, like potential manipulation or insider trading. But banning entire markets isn't the answer. It's better to use the tools you already have and focus on targeted, proportionate regulation. Shutting down prediction markets to stop a few bad actors would be like closing the stock market over insider trading scandals. It punishes the wrong people and drives activity to less safe places.
I hope the CFTC will support the growth of well-regulated prediction markets. They offer unique value for forecasting, hedging, and public information, and with the right oversight, they can thrive safely in the US. Thank you for considering my perspective.
Sincerely,
Alexander Sarmiento
