Comment Text:
I am a parent. I am also a licensed clinical social worker who has spent the last eleven years treating gambling addiction in adults under forty. I am not a lawyer. I am not a lobbyist. I do not represent an industry or an advocacy organization. I am submitting this comment because I watch what Kalshi is doing to my clients, and I need someone in a position of authority to understand what that looks like from where I sit.
I will address the Commission's specific questions. But I want to start with a story, because I think the Commission has received enough legal analysis and not nearly enough human testimony about what these platforms actually do to actual people.
A Client I Will Call Marcus
Marcus came to me eighteen months ago. He was twenty-four years old, employed in IT, never had a gambling problem in his life. He didn't go to casinos. He didn't bet on sports. He thought of himself — his words — as "a finance guy, not a gambler." He had a Robinhood account. He listened to economics podcasts. He followed political news obsessively.
Kalshi's algorithm found him on Instagram. The ad didn't look like a gambling ad. It looked like a civics lesson. It asked whether he thought the Fed would raise rates. It suggested he could "put his knowledge to work." It used the word "predict," not "bet." It used the word "market," not "casino." Within six weeks, Marcus was spending four to six hours a day on the platform. Within four months, he had lost $31,000 — most of his savings and a portion of money borrowed from his parents under false pretenses. He was not, in any clinical sense, an addicted gambler when he downloaded the app. He became one on the app. The app was designed to make that happen.
Marcus is not unusual among my current caseload. He is typical.
I am asking the Commission to understand that what I am describing is not an edge case or a cautionary tale about individual irresponsibility. It is the intended and foreseeable consequence of a product design that the Commission has licensed and allowed to proliferate. That product must be shut down.
On the Commission's Question About "Gaming" and Its Scope (Questions 19a–19f)
The Commission asks what sources should inform its determination of the scope of the term "gaming," and whether prediction market contracts have "an entertainment purpose, or an element of chance" that would bring them within that definition.
I want to answer this from a clinical rather than a legal perspective, because I believe the clinical perspective is more honest about what is actually happening.
Every behavioral addiction specialist in the country uses a set of diagnostic criteria to identify gambling disorder: preoccupation with gambling, need to gamble with increasing amounts of money to achieve excitement, repeated unsuccessful efforts to control or stop, restlessness or irritability when attempting to cut down, gambling as an escape from problems, chasing losses, lying to conceal gambling, jeopardizing relationships or employment, and reliance on others to relieve desperate financial situations caused by gambling.
My clients who use Kalshi present with every single one of these criteria. Their relationship to the platform is clinically indistinguishable from the relationship my sports-betting clients have to their apps or my casino clients have to slot machines. The fact that Kalshi's interface shows a price chart instead of a roulette wheel does not change the underlying neurological and behavioral pattern one iota. Dopamine does not care whether the binary outcome is "Chiefs cover the spread" or "Fed cuts rates by 25 basis points." The brain processes them identically.
The Commission's question about whether gaming can be distinguished from other activities by "an entertainment purpose or an element of chance" is the right question. Kalshi fails both tests simultaneously: its users overwhelmingly report that they use the platform for entertainment and excitement — not hedging — and the outcomes of its contracts are, from the perspective of the retail participant, functionally random. A twenty-four-year-old with an economics podcast habit does not have superior predictive ability about Federal Reserve decisions. He has the illusion of superior predictive ability, which is precisely what makes the product addictive.
The Commission should define "gaming" to include any binary event contract offered to retail participants where (a) the majority of volume is generated by participants with no commercial hedging interest, and (b) the product is marketed on the basis of entertainment, intellectual engagement, or competitive prediction rather than risk management. That definition encompasses virtually everything Kalshi currently offers. The Commission should then prohibit such contracts under CEA section 5c(c)(5)(C).
On the Commission's Questions About Young Participants and Responsible Gaming Standards (Questions 19d and 19e)
The Commission asks how it should factor in the characteristics of market participants who trade gaming-adjacent contracts, and specifically whether the youth of those participants is relevant. It asks about responsible gaming standards.
I want to be direct: the Commission's framing of these as open questions, to be weighed against other considerations, is not adequate to the severity of what is happening.
Kalshi has built a product that is disproportionately used by people between the ages of eighteen and thirty-five. This is not an accident. Their marketing strategy — influencer partnerships on TikTok and YouTube, advertising copy that uses the vocabulary of financial sophistication rather than gambling, an interface that rewards frequent engagement with real-time feedback — is precision-targeted at young adults who consider themselves too smart and too financially literate to gamble, but who are, neurologically, in the life stage of highest vulnerability to addiction.
The prefrontal cortex — the brain region governing impulse control, risk assessment, and long-term decision-making — is not fully developed until approximately age twenty-five. This is not a controversial finding. It is the neurological consensus that underlies why we set legal drinking ages, why we restrict certain financial products for minors, and why every responsible gambling framework in every jurisdiction that has one pays special attention to young adults. Kalshi and its competitors have deliberately targeted the population most neurologically vulnerable to developing compulsive behavior and have provided them with a product that has no guardrails whatsoever.
There are no mandatory loss limits. There is no session time limit. There is no pop-up after an extended losing streak asking whether the user wants to take a break. There is no self-exclusion program integrated with national gambling exclusion registries. There is no age-verification process beyond a checkbox. There is no funding of gambling addiction treatment. There is not even a required disclosure that the activity carries addiction risk.
Every licensed casino in this country is required to post problem gambling hotline numbers. Every licensed sports betting operator is required to implement responsible gambling tools. Kalshi is required to do none of these things because the Commission has not required them — and the Commission has not required them because it has not been willing to acknowledge that Kalshi is operating a gambling business.
I am asking the Commission, directly:
If a company were offering products with these characteristics — binary outcomes, retail marketing to young adults, variable reward schedules, no responsible gambling infrastructure — through any channel other than a CFTC-registered DCM, it would be shut down by state gambling regulators immediately. The Commission must ask itself why the accident of its own registration should exempt these companies from protections that exist for a reason.
The Commission should require, at an absolute minimum, that any prediction market DCM serving retail participants implement responsible gambling protections equivalent to the most stringent state sports betting standards, including hard spending limits, mandatory cooling-off periods, integration with national self-exclusion programs, and mandatory gambling addiction funding. More appropriately, the Commission should find that the absence of these protections from existing platforms — and the demonstrated harms flowing from that absence — constitutes grounds for prohibiting retail-facing prediction market contracts as contrary to the public interest.
On the Commission's Questions About Manipulation and Inside Information (Questions 29–32)
The Commission asks thoughtful questions about whether informed trading on prediction markets serves a public interest by improving price accuracy, or whether it creates manipulation risks.
I want to offer a perspective that the Commission's framing misses: for retail participants, the presence of informed institutional traders is not a feature. It is a predatory dynamic.
When a hedge fund with sophisticated political intelligence trades the same contract as Marcus — my twenty-four-year-old client — the hedge fund is not contributing to price discovery in a way that helps Marcus. It is extracting money from Marcus. The "information aggregation" benefit that prediction market advocates cite accrues to the public in the form of slightly more accurate probability estimates. The cost accrues to retail participants who are systematically on the wrong side of trades against better-informed counterparties.
This is the structure of every extractive gambling business ever operated. The house — or in this case, the informed institutional trader — wins systematically. The retail participant loses systematically. The platform profits from both sides of every trade. The Commission is licensing this structure and calling it price discovery.
On the specific question of federal employees trading on non-public information: the Commission asks how prediction markets are likely to be affected by this. The answer is that they are already affected by it, actively and continuously, and the Commission has done nothing. There is no surveillance program. There are no enforcement actions. There are now thousands of contracts on outcomes that federal officials have direct material non-public information about, and no mechanism to detect or deter trading on that information.
The Commission asks whether prediction markets are more susceptible to manipulation than other markets. Yes. Obviously yes. The underlying events of many prediction market contracts are within the control of, or subject to the advance knowledge of, small numbers of identifiable individuals. A futures contract on corn prices is not manipulated by a single person deciding to make a phone call. A contract on whether a specific senator will switch parties can be.
On the Commission's Questions About Core Principles, Specifically Manipulation Susceptibility (Question 2c) and Market Surveillance (Question 2d)
Core Principle 3 requires that DCMs list only contracts not readily susceptible to manipulation. I submit that the Commission has failed to meaningfully enforce this principle against prediction markets.
A contract whose resolution depends on the decision of a single named individual — whether a specific official resigns, whether a specific bill receives a floor vote, whether a specific company announces a merger — is by definition susceptible to manipulation by that individual. A contract whose resolution depends on an announced government data release is susceptible to manipulation by anyone with advance access to that data. These are not theoretical risks. They are the structural features of a product category the Commission has allowed to list 1,600 contracts in a single year.
The Commission asks what surveillance practices would be useful. I would ask a prior question: does the Commission have any realistic capacity to surveil this market at its current scale? The answer, self-evidently, is no. And if the Commission cannot surveil a market to detect and deter manipulation, it should not be authorizing that market to operate.
What I Am Asking the Commission to Do
I am not a regulator. I am not going to draft rule text. What I can tell you is what I need as a clinician and what my clients need as human beings.
I need the Commission to stop pretending this is a close call. Kalshi is a gambling company. Its products cause gambling addiction. Its marketing targets young people. Its regulatory status as a DCM is a legal fiction that exists because the company found a gap in the law and the Commission has declined to close it.
I need the Commission to revoke Kalshi's DCM designation or, at minimum, to prohibit the class of retail-facing binary event contracts that constitute its core business — contracts with no genuine hedging constituency, marketed for entertainment to young adults, with no responsible gambling infrastructure.
I need the Commission to require, for any prediction market permitted to continue operating, a responsible gambling framework as rigorous as what we require of casinos — because that is what the evidence demands and because the human cost of doing less is being paid right now by people like Marcus.
I need the Commission to stop studying this. The Commission has been studying prediction markets since 2008. My clients don't have another eighteen years to wait while the Commission decides whether the word "gaming" applies to a product that is destroying their finances and their mental health.
I am available to provide clinical testimony, case documentation (appropriately anonymized), and any other information that would assist the Commission. I urge the Commission in the strongest possible terms to act.
