Comment Text:
Dear Chairman and Commissioners,
My name is Ethan Caviness, and Im associate (pending swear in and acceptance of terms by the Texas Board of Law Examiners and Supreme Court of Texas in the coming days) based in Texas, working in a law firm where I often deal with regulatory and financial matters. Im writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. Ive used prediction markets a few times myself, and from both a personal and professional standpoint, I strongly support their development under proportionate, well-thought-out regulation by the CFTC.
As a legal professional, I see prediction markets as a powerful tool for aggregating information and producing forecasts that consistently outperform polls and pundits. This isnt just a hobbyists game; its a mechanism for better decision-making, whether for elections, public events, or economic indicators. The data these markets generate can inform businesses, policymakers, and even regular citizens like me who want clearer insight into uncertain events. I also value the ability to hedge real risks. For instance, a small business client of mine could use these markets to mitigate uncertainty around regulatory changes or tariff shifts. This isnt gambling, its practical risk management, and classifying event contracts as gaming ignores their legitimate economic purpose.
Im also concerned about U.S. competitiveness. If we over-restrict or ban prediction markets, were not eliminating them, were just pushing activity to unregulated offshore platforms where consumer protections are nonexistent. Id much rather see firms like Kalshi, which are pushing for federal oversight, succeed under CFTC rules than cede this space to foreign entities. From a legal perspective, I believe the CFTC already has strong tools to address manipulation and insider trading in other derivatives markets. Those same mechanisms can work here without resorting to broad categorical bans. Targeted regulation makes more sense. Plus, informed trading isnt a flaw, its a feature. It improves price discovery and benefits everyone, not just traders.
Looking at some of your specific questions, Id like to address a few directly. On Question 7 under Public Interest, I believe innovation and consumer protection arent mutually exclusive; regulated markets like those on a CFTC-registered DCM balance both. On Question 15 under Listed Activities, I urge you not to equate event contracts with gaming, as they serve real purposes like hedging and forecasting. And on Question 29 under Inside Information, Id argue that informed traders enhance market accuracy, and existing laws already prohibit misuse of nonpublic information.
I understand the concerns about potential abuse, but shutting down or overly restricting these markets punishes law-abiding participants and stifles innovation. The U.S. should lead in financial technology, not fall behind. I respectfully ask the CFTC to craft rules that support prediction markets with targeted oversight, ensuring transparency and protection without broad prohibitions.
Thank you for considering my input.
Sincerely,
Ethan Caviness
