Comment Text:
Dear Chairman and Commissioners,
My name is Thomas Caffery, and I'm a student based in New York. I'm writing to express my support for the proportionate regulation of prediction markets as outlined in the Advance Notice of Proposed Rulemaking on Prediction Markets (91 FR 12516). I've used prediction markets a few times myself, and I believe they serve a valuable purpose for individuals like me, as well as for society at large. I want to share my perspective on why these markets matter and why the CFTC should regulate them thoughtfully rather than restrict them.
As a student, I often find myself digging into data on public events, whether it's elections or policy decisions, to better understand the world. Prediction markets have consistently provided forecasts that are more accurate than polls or pundits. I've seen this firsthand when tracking election outcomes on platforms like Kalshi. The aggregated information from these markets cuts through the noise of opinion pieces and gives a clearer picture of what's likely to happen. This isn't just helpful for me; its useful for anyone trying to make sense of complex events, including journalists and even policymakers. I think this ties directly to your questions on public interest, particularly Question 8, about the benefits of price discovery. These markets produce unique insights that we can't get elsewhere.
I also see real value in how prediction markets let people hedge against personal or business risks. For instance, a small business owner might use these markets to offset uncertainty around election outcomes that could impact taxes or regulations. Even as a student, I can imagine hedging against economic shifts, like a major Federal Reserve decision, that might affect my future job prospects or loans. This isnt gambling. Its a practical tool, and I believe it aligns with Question 11 in your ANPR, regarding whether event contracts serve a risk management purpose.
Another reason I support regulation over restriction is safety. Platforms like Kalshi, which operate under CFTC oversight as a designated contract market, are far more trustworthy than unregulated offshore sites. If we over-restrict or ban these markets, people will just turn to less safe options. I think this speaks to Question 7 on balancing innovation with consumer protection. Regulation keeps participants protected while allowing innovation to flourish.
I understand there are concerns about manipulation or insider trading, but I dont think banning or overly restricting prediction markets is the answer. The CFTC already has tools to address fraud and manipulation in other derivatives markets, and those can be adapted here. Shutting down an entire market because of a few bad actors feels like punishing everyone else.
I urge the CFTC to support well-regulated prediction markets with targeted rules that address specific risks without stifling their benefits. These markets provide accurate forecasts, help with risk management, and are safer under your oversight. Please dont let over-regulation push this valuable tool out of reach for people like me.
Sincerely,
Thomas Caffery
