Prediction Markets; Public Interest Determinations - Proposed Rules

Joseph Sky Ryu, CEO of Gambit Gamer, Inc., supports the proposed framework for public-interest determinations regarding prediction markets. The company argues that contracts based on objective, aggregate, and publicly verifiable competitive-performance outcomes (both physical and digital) serve the public interest by providing a transparent and regulated alternative to offshore, unregulated markets.

Primev, represented by its CEO, supports the Commission's proposed rules for prediction markets, praising the focus on underlying events over trading acts. They suggest specific clarifications regarding "discrete-action" factors, objective settlement data, and the treatment of fast-settling contracts to ensure the rules do not overreach while maintaining market integrity.

Brierly Research, an independent ratings and research firm for event markets, supports the Commission's proposed rule on prediction markets. They argue that public-interest determinations should be based on "resolvability"—specifically the presence of clear definitions, sources, and clocks—rather than just the subject matter of the contracts. They propose a standard of independent, reproducible settlement-risk assessments based on five specific drafting safeguards to ensure contract integrity.

Tyler Young, a frequent user of prediction markets, supports preserving access to federally regulated prediction markets for sports and esports events. He argues that these markets should be regulated based on their specific structures and safeguards rather than being treated as unregulated gambling.

The Tonto Apache Tribe opposes the proposed rules because they could allow prediction-market contracts to function as sports wagering or casino-style gaming, which would undermine Tribal sovereignty, economic self-sufficiency, and existing state and Tribal regulatory frameworks. They urge the Commission to reaffirm prohibitions on such contracts, preserve the statutory boundary between gambling and legitimate commodities, and conduct government-to-government Tribal consultation before taking final action.

Johnny Ray Work Jr. supports the Commission's proposed public-interest framework for sports event contracts but requests specific clarifications to ensure the rule is administrable. He argues that the prohibition should focus on the settlement basis rather than pricing inputs and requests a precise definition for "limited-control or discrete outcomes" to avoid capturing permitted aggregate statistical contracts.

Academic researchers from Stanford University and Singapore Management University provide empirical evidence of settlement manipulation in short-horizon prediction markets. They support the proposed public interest determinations but argue for the inclusion of specific factors regarding tradable price manipulation, effects on related markets, and settlement horizons.

Senator David H. McCormick supports the Commission's efforts to clarify public interest determinations for prediction markets, particularly regarding contracts involving unlawful activities or games of chance. He urges the Commission to maintain a principles-based approach that balances innovation with investor protection and requests a public meeting of the Innovation Advisory Committee.

Noah Rafkin, owner of the independent consumer-data site BonusBandit, supports the proposed definition of gaming to include casino-style games. He provides data from his own payout studies and a complaint index to support the Commission's use of negative public-interest factors regarding random-chance games and state-law violations.

Chuan Sun supports the Commission's proposed event-focused structure for public interest determinations in prediction markets. The commenter advocates for a neutral "involves" standard regarding contract structure, rewards for deterministic resolution rules, and recognition of the hedging utility of economically purposed event contracts.