Comment Text:
I would like the Commission to take strong regulatory action regarding event contract derivatives traded on prediction markets. The conduct of prediction markets such as Kalshi and Polymarket raises serious concerns about market integrity, insider trading, and the commodification of events that should be protected from financial speculation. Event contracts that allow wagering on military operations, foreign policy decisions, terrorism, assassination, or other government actions create unacceptable risks because individuals with nonpublic information about those decisions have both the opportunity and financial incentive to exploit that information. Wagering on elections has the potential to influence voter turnout because voters may feel that it is not worth voting if their candidate is predicted to stand little chance of winning. When citizens perceive that government decisions may be influenced by private financial interests, it erodes public trust.
The Commission should explicitly prohibit event contracts related to military operations, acts of war, terrorism, political assassinations, and non-financial government policy decisions and elections as contrary to the public interest. Additionally, any event contract where the outcome can be known in advance or controlled by a specific individual or small group is inherently susceptible to manipulation and should face a presumption against approval. This includes award show results, political speeches, corporate announcements, and any event where insiders have definitive advance knowledge.
I also believe that regulation of betting is in order because we have seen that sports betting and casino gambling have become addictive and have resulted in a whole new industry of addiction therapy for people who have been financially devastated and have lost a home and sometimes their family as a consequence of their compulsion. Just because businesses have discovered a new way to profit doesn't mean that we don't need to carefully consider the impact of what is in some ways a potentially dangerous product.
The Commission has both the authority and responsibility under the Commodity Exchange Act to establish clear prohibitions on event contracts that are contrary to the public interest. I ask that the Commission prohibit these dangerous categories of event contracts, strengthen surveillance and enforcement mechanisms to detect insider trading, and prioritize market integrity and public welfare over industry growth. The commodification of every aspect of human life, including war, death, and governance, should not proceed without meaningful guardrails, and the Commission's action on this rulemaking will signal whether we can put honesty, human lives and democracy ahead of maximization of business profit-taking.
