Comment Text:
Dear Secretary Kirkpatrick,
I am a parent. I am writing this comment because my 24-year-old son lost $14,000 on Kalshi in eight months. He is not a commodity trader. He has never hedged a position in his life. He found Kalshi through a sponsored post on Instagram, deposited $500 using Apple Pay in under three minutes, and spent the better part of a year glued to his phone watching contracts tick up and down on whether Jerome Powell would raise interest rates, whether a specific Senate bill would pass, and whether a named athlete would win a championship. He is now in debt, in therapy, and — when I told him I was submitting this comment — asked me to tell the Commission that he didn't understand he was gambling until it was too late. He thought he was investing.
That is the company the Commission has licensed. That is the harm the Commission's inaction has produced. I want that on the record before anything else.
I. What the Commission Is Really Being Asked to Decide
Strip away the statutory language, the footnotes, and the regulatory history, and this ANPRM presents a single question: will the CFTC continue to function as the legal shield that allows Kalshi to operate a gambling business in every state in America without complying with a single state gambling law?
Because that is what is happening. That is the only accurate description of what is happening.
Every state that permits sports betting requires the operator to verify customer age with the same rigor as a liquor store. Kalshi does not. Every state requires self-exclusion programs, loss limit options, and problem gambling hotline disclosures. Kalshi has none of these in any meaningful form. Every state requires that a portion of gambling revenue fund addiction treatment. Kalshi funds nothing. Every state restricts advertising that targets young adults. Kalshi runs Instagram and TikTok campaigns.
Kalshi can do all of this — operate a nationwide retail gambling platform with zero consumer protections — because it holds a CFTC designation that was intended for commodity exchanges serving commercial hedgers, and because the CFTC has spent eighteen years declining to close the gap between what that designation was designed to permit and what Kalshi has built within it.
The Commission asks what factors it should consider in its public interest determination under CEA section 5c(c)(5)(C). Here is the answer: the Commission should consider that it is the only thing standing between Kalshi and the consumer protection laws that every other gambling operator in this country is required to follow. That is not a position the Commission should be comfortable occupying.
II. This Is What Regulatory Capture Looks Like
Kalshi has spent millions of dollars lobbying Congress and the executive branch. It has litigated aggressively against every regulatory attempt to constrain it, including the Commission's own 2024 proposed rule, which was withdrawn in 2026 under circumstances the Commission's ANPRM describes with striking delicacy as arising from "litigation concerning the Commission's exclusive jurisdiction." Translation: Kalshi sued, and the Commission retreated.
The company has cultivated a public narrative — amplified by libertarian think tanks, financial media, and an army of social media commentators who benefit financially from prediction market activity — that frames any regulatory oversight as government censorship of free markets and free speech. It has wrapped a gambling product in the intellectual prestige of academic prediction market research conducted by institutions like the University of Iowa, research that was designed for small-scale, no-profit academic forecasting exercises bearing no resemblance whatsoever to a VC-backed consumer app with a growth-at-all-costs mandate.
The Commission asks, in question 9, whether elements of the former "economic purpose" test should inform its public interest determination. Yes. Obviously yes. The economic purpose test existed precisely to prevent what Kalshi has done: the laundering of a non-economic retail gambling product through commodity exchange registration. Congress repealed it in 2000 as part of broader financial deregulation. That deregulation looks very different twenty-six years later, from the vantage point of a prediction market industry that has exploited it to build a multi-billion dollar retail gambling operation. The Commission should reinstate an economic purpose requirement through rulemaking immediately.
III. The Gaming Provision in CEA Section 5c(c)(5)(C) Means What It Says
The Commission asks in question 19 what factors should inform its interpretation of the term "gaming" and whether specific characteristics — an entertainment purpose, an element of chance — distinguish gaming from other activities.
With respect, this question has an answer. The Commission does not need to commission further research to determine whether a binary contract on whether a named athlete will win a championship, whether a specific television personality will be fired, or whether a named political candidate will win an election is a gaming contract. It is a gaming contract. It has an entertainment purpose. It involves an element of chance. Its participants have no commercial exposure to the underlying outcome. It pays a fixed sum on a binary result. It is, by every functional and legal definition that any state gambling regulator would apply, a wager.
The Commission's reluctance to say this plainly is not a product of genuine definitional ambiguity. It is a product of the fact that saying it plainly would require the Commission to act on the conclusion — to prohibit these contracts, to revoke or condition the registrations of DCMs whose primary business consists of offering them, and to defend that action in court against a well-funded adversary. The Commission should do all of those things. The statutory authority is clear. The public interest is clear. What is missing is institutional will.
IV. Young People Are Being Specifically and Deliberately Targeted
The Commission's question 19(d) asks whether prediction market participants tend to be younger than participants in other financial instruments and how this should inform the Commission's analysis. The Commission phrases this as an empirical uncertainty. It is not one.
Kalshi's marketing strategy is a matter of public record. The company has run paid advertising campaigns on Instagram, TikTok, YouTube, and Snapchat — platforms whose user bases skew heavily toward people under 30. It has paid influencers with young followings to promote its platform. It has designed its app with the visual language, notification architecture, and reward mechanics of mobile gaming. It offers referral bonuses structured identically to those used by sports betting apps. Its homepage, at various points, has featured imagery and language indistinguishable from DraftKings or FanDuel.
None of this is accidental. Kalshi knows exactly who its customers are, who is most susceptible to its product, and how to reach them. The company has made a deliberate choice to build its user base among young adults who are simultaneously the most financially vulnerable — carrying student debt, earning entry-level wages, lacking financial reserves — and the most susceptible to gambling disorder.
The research on this point is overwhelming and the Commission should treat it as settled: young adults, particularly young men between 18 and 35, develop gambling disorders at rates two to four times higher than older adults. Mobile gambling applications — which is what Kalshi is, functionally — are associated with more severe gambling disorder presentations than traditional gambling formats because of their constant accessibility, their social integration, and their gamified design. The American Psychiatric Association, the National Council on Problem Gambling, and virtually every public health authority that has examined mobile gambling has reached the same conclusion.
The Commission has the authority under CEA Core Principle 2 to require that DCMs prohibit abusive trading practices. Marketing a gambling product to vulnerable young adults using psychological manipulation techniques borrowed from the mobile gaming industry is an abusive practice. The Commission should say so, in a rule, with teeth.
V. Political Contracts Are in a Category of Their Own and Must Be Banned Outright
No other single category of event contract offered by Kalshi or any other prediction market DCM presents the combination of harms that political event contracts present, and no other category deserves more unequivocal regulatory action.
On manipulation susceptibility, which the Commission addresses in questions 29 through 32: political outcomes are uniquely susceptible to manipulation through the prediction market itself. A sufficiently large position in a contract tied to a political outcome creates financial incentives to take real-world actions — disinformation campaigns, voter suppression efforts, strategic media manipulation — to influence that outcome. This is not a hypothetical. It is the direct, foreseeable consequence of creating liquid retail financial markets in democratic outcomes, and it has no parallel in any legitimate commodity derivative market where the underlying asset is not a public good.
On insider trading, which the Commission raises in questions 29 through 32: political event contracts create the largest insider trading surface in the history of financial regulation. There are approximately 10,000 political appointees in the executive branch, 535 members of Congress and thousands of their staff, thousands of registered lobbyists, and hundreds of federal judges — all of whom routinely possess material non-public information about outcomes on which Kalshi offers tradeable contracts. CEA sections 4c(a)(3) and 4c(a)(4) prohibit some of this trading, but the provisions are narrow, the enforcement history is essentially nonexistent, and the scale of the problem has expanded by orders of magnitude since those provisions were written.
On democratic integrity, which no provision of the CEA directly addresses but which the Commission's public interest authority is broad enough to encompass: there is something categorically wrong with a society in which citizens are invited to place financial bets on electoral outcomes. The financialization of democratic participation corrupts the civic meaning of elections in ways that are real even if they are difficult to quantify. When winning an election becomes a trigger for financial settlement, elections become, in part, financial instruments — and the participants in those instruments develop interests that may be orthogonal or contrary to the public interest in fair democratic processes.
The Commission should prohibit all event contracts based on electoral outcomes, legislative outcomes, regulatory decisions, and the actions of named government officials. This is not a close call.
VI. The Commission's Procedural Framework Is Being Exploited in Plain Sight
The self-certification process, through which Kalshi and other DCMs certified approximately 1,600 new event contracts for listing in 2025 alone, was not designed to handle this volume, this novelty, or this risk. The Commission knows this. The one-business-day notice requirement, designed for incremental contract modifications by established exchanges in mature markets, has become the mechanism through which a gambling company lists thousands of new gambling products per year with no meaningful regulatory review.
The Commission asks in questions 23 through 28 about procedural factors relevant to the listing process and the public interest determination. The answer is that the entire self-certification pathway should be suspended immediately for event contracts until the Commission completes this rulemaking and adopts new standards. The Commission has authority to do this. Every day it declines to do so, additional contracts are listed, additional retail participants are exposed, and the industry presents the volume of existing contracts as evidence of regulatory acceptance.
VII. The Commission Must Confront What It Has Permitted
Since 2021, the Commission has watched prediction markets grow from a niche financial product to a mass retail gambling industry. It has watched the self-certification pipeline flood with contracts covering political candidates, celebrities, sporting events, and television shows. It has watched a company build a business model explicitly designed to circumvent state gambling laws by obtaining federal commodity exchange status. It has watched that company market its product aggressively to young people with documented vulnerability to gambling addiction. It has proposed a rule, retreated from that rule under litigation pressure, and now issued a third request for public comment.
At some point, continued study becomes a choice. The Commission is choosing, each day it declines to act, to allow these harms to continue. The public record on the nature of these harms is complete. The Commission's statutory authority to address them is clear. The only remaining question is whether the Commission will exercise that authority or whether it will produce another concept release, receive another round of industry comments drafted by well-paid lawyers, and defer action for another cycle.
The Commission should revoke or substantially condition the DCM designations of platforms whose primary business is retail-facing binary gambling products. It should categorically prohibit political event contracts. It should impose, by rule, responsible gambling protections equivalent to those required of licensed gambling operators in the most protective state jurisdictions. It should reinstate an economic purpose requirement as a precondition to event contract listing. It should refer the question of insider trading on political prediction markets to the Department of Justice.
And it should do all of this understanding that the people who will be most affected by its failure to act are not hedge funds or institutional investors. They are 24-year-olds who found an app on Instagram and didn't realize they were gambling until they were $14,000 in debt.
My son asked me to tell you his name. I have chosen not to include it, to protect his privacy. But I want the Commission to understand that he is not an abstraction. He is a person. There are hundreds of thousands of people like him. They are why this comment exists, and they are why the Commission must act.
