Comment Text:
Dear Secretary Kirkpatrick:
This letter accompanies a comprehensive regulatory framework analysis submitted as a public comment in response to the Commission's Advanced Notice of Proposed Rulemaking on prediction markets (RIN 3038-AF65). The accompanying memorandum represents an independent policy analysis developed through extensive review of the current regulatory landscape, pending federal legislation, state enforcement actions, tribal sovereignty concerns, and international precedents. It is not a form comment. It contains model statutory text, section-by-section commentary, and a complete governing architecture for prediction markets in the United States.
As of April 2026, the prediction markets landscape presents an unprecedented regulatory crisis. More than 30 active lawsuits span federal and state courts. The Commission is simultaneously litigating against three states — Arizona, Connecticut, and Illinois — following suits filed April 2, 2026. The Third Circuit issued a divided ruling in KalshiEX LLC v. Flaherty on April 7, 2026. Ninth Circuit proceedings are pending following Nevada's preliminary injunction of April 4, 2026. For the first time in history, criminal charges have been filed against a registered prediction market platform. A 38-state attorney general coalition is challenging federal preemption. Documented insider trading, national security exploitation, and ethically indefensible markets on war casualties and military rescue operations have entered the public record. The Commission's current regulatory posture — asserting exclusive federal jurisdiction through litigation rather than legislation — is unsustainable.
The accompanying memorandum proposes a Hybrid Regulatory Framework as the governing architecture for prediction markets in the United States. The Hybrid Framework establishes federal baseline standards administered by the Commission while preserving meaningful state regulatory authority through an opt-in/opt-out mechanism and protecting tribal sovereignty through mandatory consultation and structured revenue-sharing. The memorandum demonstrates why both full federal preemption and pure state primacy fail — politically, constitutionally, and operationally — and why the Hybrid Framework is the only model that simultaneously serves market integrity, consumer protection, state sovereignty, tribal rights, and responsible innovation.
🤙🏾
