Comment Text:
Dear Chairman and Commissioners,
My name is Michael Gegen, and I'm a trader and investor from Minnesota. I'm writing to provide my input on the Advance Notice of Proposed Rulemaking on Prediction Markets, as published in 91 FR 12516. I actively trade on platforms like Kalshi, and I strongly support the development of well-regulated prediction markets in the United States. I believe they provide unique value to individuals like me, businesses, and society as a whole, and I urge the CFTC to adopt proportionate regulations rather than broad bans or overly restrictive rules.
I've been trading on prediction markets for a while now, and I can tell you firsthand that these platforms offer information and opportunities I can't find anywhere else. Whether it's forecasting election outcomes or economic indicators like CPI data, the prices on these markets often cut through the noise of polls and punditry. This isn't just helpful for traders; its valuable for anyone making decisions, from small business owners to regular citizens. For example, Ive used these markets to hedge personal financial risks tied to policy changes that could impact my investments. It's a practical tool, not a game.
I also want to stress that event contracts aren't gambling. They require research, analysis, and real-world judgment, much like trading stocks or commodities. Classifying them as "gaming" ignores their legitimate economic purpose, like price discovery and risk management. On this point, Id like to address Question 15 from your ANPR about defining gaming versus legitimate markets. These contracts serve a clear purpose for hedging and forecasting, distinct from pure chance-based activities, and should be regulated accordingly.
I'm also concerned about the risk of over-restriction or outright bans pushing activity to unregulated offshore platforms. Regulated markets like Kalshi, under CFTC oversight, are far safer for participants. If the U.S. cracks down too hard, traders like me will face worse options abroad, with no protections. This ties into Question 7 on balancing innovation and consumer protection. I believe the U.S. should lead in financial innovation, not cede ground to other countries. We can do this by using the robust tools the CFTC already has to prevent manipulation and insider trading, as noted in Questions 1 and 29. Informed trading, by the way, improves price discovery and benefits everyone, not just traders.
Finally, I urge the CFTC to focus on targeted, proportionate rules rather than categorical prohibitions. Broad bans punish honest participants and stifle innovation. Look at academic research on prediction markets, which shows how they aggregate information efficiently. Let's build on that, not shut it down. I ask that you support a regulatory framework that allows prediction markets to thrive while addressing specific risks with the tools already at your disposal.
Thank you for considering my perspective.
Sincerely,
Michael Gegen
