Comment Text:
Dear Chairman and Commissioners,
My name is Diego Alegria, and I'm a trader and investor based in California. I've been actively trading on prediction markets like Kalshi and Polymarket for a while now, and Im writing to share my perspective on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I strongly support the proportionate regulation of these markets and believe they offer real value to individuals like me, as well as to society at large.
As a trader, I use prediction markets to hedge personal and business financial risks. For instance, Ive placed trades on election outcomes and economic indicators like CPI releases because they directly impact my investment portfolio and tax planning. This isn't just speculative betting. Its a practical tool to manage uncertainty, much like how I use other derivatives to hedge risks in traditional markets. I believe event contracts serve legitimate economic purposes and shouldn't be classified as gaming. Theyre about price discovery and risk management, not luck.
I also want to stress that regulated markets like Kalshi, operating under CFTC oversight, are far safer than unregulated offshore platforms. If the CFTC over-restricts or bans these markets, activity will just move to less transparent venues where theres no accountability. Thats worse for everyone. The U.S. should be leading in financial innovation, not pushing it overseas. We have a chance to set the standard here, and I hope we take it.
Addressing some of the specific questions in the ANPR, particularly from Topic Area B on Public Interest (Questions 7-14), I believe prediction markets balance innovation with consumer protection when properly regulated. They provide unique information through accurate pricing that benefits not just traders but the public too. On Topic Area E regarding inside information (Questions 29-32), I think informed trading actually improves price discovery. It makes the markets predictions sharper, which helps everyone. Of course, insider trading by federal officials or others with nonpublic information is a concern, but its already illegal. The CFTC has robust tools to prevent manipulation and insider trading in other markets. Those same tools can work here without needing to shut down entire categories of contracts.
Im not blind to the risks. Manipulation is a real issue, and bad actors should be dealt with harshly. But banning or over-restricting prediction markets punishes honest participants like me who use them responsibly. The solution is targeted enforcement, not broad prohibitions.
I urge the CFTC to support the growth of well-regulated prediction markets with rules that address specific risks while preserving their benefits. Lets keep these markets accessible, transparent, and innovative right here in the U.S.
Thank you for considering my input.
Sincerely,
Diego Alegria
