Comment Text:
Public Comment on Prediction Markets Rulemaking
17 CFR Chapter I — Federal Register Release 91 FR 12516
Submitted April 30, 2026
I. Statement of Interest
We submit this comment as a retail market participant with direct experience trading on Kalshi across multiple event categories, including elections, commodities, weather, and other consumer-facing contracts. We support innovation in prediction markets, but believe stronger operational and consumer-protection standards are necessary as these platforms scale to retail users.
This comment is based on direct platform experience and broader publicly reported customer concerns.
II. Summary of Position
Prediction market exchanges now provide retail users with access to contracts tied to commodities, politics, sports, entertainment, weather, and real-world events. The current regulatory framework, developed largely for traditional futures markets, has not fully adapted to consumer-facing event trading platforms.
Three areas deserve particular attention:
1) Settlement and collateral integrity: Funds from resolved winning positions should be credited promptly and made consistently available for subsequent trading activity.
2) Resolution transparency and disclosure: Material contract resolution rules should be clearly presented before order placement, not buried in lengthy rulebooks or linked documents.
3) Objective contract interpretation: Markets referencing brands, products, public events, or real-world outcomes should be resolved using clear pre-defined standards rather than subjective or expansive interpretations after trading closes.
III. Specific Operational Concern: Delayed Use of Resolved Funds
We recently experienced a situation in which previously resolved winnings were not recognized as available collateral when attempting to place new trades the following morning. Multiple orders were rejected for “insufficient collateral” despite recently completed contract payouts.
Whether caused by posting delays, reconciliation lag, or internal system design, the practical effect was that resolved funds were not usable for new positions without clear advance disclosure.
For a platform promoting active short-term trading, delays between contract resolution and practical collateral availability can materially disadvantage retail participants.
IV. Broader Pattern of Publicly Reported Concerns
Based on publicly available customer reviews, complaints, media reporting, and user discussions, several recurring themes appear.
1. Withdrawal and Funds Access
Users report delayed withdrawals, failed transfers, account restrictions, or difficulty accessing funds after deposits are accepted.
2. Customer Support Delays
Many users describe slow responses, automated replies without meaningful resolution, and lack of timely human escalation for urgent account issues involving funds or account access.
3. Resolution Disputes
Some users state that markets resolved in ways they did not reasonably expect, often due to technical rules, fallback provisions, or narrow interpretations not clearly understood before trading.
4. Hidden or Complex Rules
Users frequently report learning important contract provisions only after settlement rather than at the point of trade entry.
5. App Reliability and Trading Interface Issues
Public complaints include inaccurate balances, stale positions, delayed confirmations, rejected orders, or technical problems during volatile trading periods.
6. Marketing and Consumer Protection Concerns
As prediction markets expand toward younger retail audiences, clear standards for responsible advertising and outreach are increasingly important.
7. Inconsistent Definitions and Sub-Brand Conflation
Certain branded-event contracts appear to raise concerns regarding objective interpretation standards. For example, a market concerning whether Amazon Prime would appear during the 2026 Super Bowl reportedly resolved affirmatively even though the primary advertisement centered on Alexa+, a separate Amazon sub-brand, while any Prime branding was minor or incidental.
Where a contract references a specific product or subscription service, users should be able to rely on the ordinary meaning of that term. Conflating a parent company’s broader branding with a distinct named service can create ambiguity and reduce confidence in fair settlement outcomes.
V. Recommendations
We respectfully request that the Commission consider the following measures in its rulemaking:
1. Prompt Collateral Recognition
Require exchanges offering short-duration contracts to credit resolved winnings within a defined time window or prominently disclose delays before order entry.
2. Plain-Language Resolution Disclosures
Require all material settlement rules to be displayed clearly on the contract page before purchase, including fallback methods, cancellation rules, source dependencies, and special contingencies.
3. Independent Dispute Review
Require a dispute mechanism that is meaningfully independent from the entity listing and resolving the contracts.
4. Objective Interpretation Standards
Require exchanges to apply consistent and pre-disclosed standards when interpreting branded references, products, subsidiaries, logos, affiliates, sponsorships, or incidental appearances in event-based contracts.
5. Operational Reliability Standards
Set minimum standards for order execution systems, balance reporting, position display, and outage disclosures.
6. Customer Support Standards
Require timely human escalation channels for issues involving withdrawals, account access, disputed settlements, or locked funds.
7. Audit Trail Transparency
Require users to have access to logs showing margin calculations, collateral availability, rejected-order reasons, and payout determinations.
8. Responsible Marketing Guidance
Establish clear rules regarding marketing to students, young adults, and potentially vulnerable retail participants.
VI. Conclusion
Prediction markets may provide legitimate informational, forecasting, and hedging value. Our concern is not whether these markets should exist, but whether the operational safeguards, disclosures, and dispute-resolution standards currently match the risks faced by retail participants.
Our experience was modest in scale, but it reflects broader recurring issues publicly reported by users. We respectfully ask the Commission to prioritize transparency, fairness, operational reliability, and consumer protection as it finalizes this rulemaking.
Thank you for the opportunity to comment.
Respectfully submitted,
Texas
April 30, 2026
