Comment Text:
Public Comment: RIN 3038-AF65
Submitted to: Christopher Kirkpatrick, Secretary of the Commission, CFTC
Date: 04/30/2026
I am a parent. I am also a licensed clinical social worker who has spent the last eleven years treating adolescents and young adults for behavioral addiction, including gambling disorder. I am not a lawyer, a lobbyist, or a financial professional. I am submitting this comment because I watch, in my clinical practice every week, what companies like Kalshi are doing to young Americans — and because the Commission appears not to have heard enough from people like me.
I want to be direct: Kalshi should be shut down. Its DCM designation should be revoked. And the Commission bears meaningful responsibility for what has happened on its watch.
What I See in My Office
In the past two years, I have treated fourteen patients — ages 19 to 31 — for whom Kalshi or a similar prediction market platform was a primary or significant contributing factor in a gambling disorder diagnosis. That is fourteen patients in a single private practice in a single mid-sized American city. I am not a researcher. I cannot tell you what the national numbers look like. But I can tell you what these fourteen people have in common.
They are almost all male. They are college-educated or currently enrolled in college. They found Kalshi through social media — Instagram ads, Twitter, TikTok, YouTube pre-rolls, or a friend who shared a referral link. They were drawn in by the framing: this was not gambling, they were told and believed. This was smart. This was analytical. This was what sophisticated people did to put their political knowledge and current events awareness to work. Several of them had previously avoided sports betting apps precisely because they recognized those as gambling. Kalshi's marketing gave them permission to engage with an identical product by dressing it in the clothing of finance and civic participation.
Every one of them lost money they could not afford to lose. Several lost money they had taken from family members without disclosure. Two lost their housing deposits. One dropped out of school. Three have described suicidal ideation connected to their financial losses on these platforms.
I am submitting this comment because those three people deserve to be in the Commission's record. And because the Commission's ANPRM, for all its careful legal analysis, does not once use the words "addiction," "mental health," or "suicide."
The Commission's Question 19 Deserves a Clinical Answer
The Commission asks, in question 19(d), whether it should consider that participants in gaming-adjacent event contracts "tend to be younger than those trading other financial instruments," and how this should inform its public interest determination.
I will answer that question directly, as a clinician.
Young adults — particularly men between the ages of 18 and 30 — are the population most vulnerable to gambling disorder. The neuroscience is well established: the prefrontal cortex, which governs impulse control and long-term risk assessment, does not fully develop until the mid-twenties. Adolescents and young adults are structurally less capable of accurately assessing the long-term consequences of repeated gambling losses and more susceptible to the dopaminergic reward cycles that variable-ratio reinforcement schedules — the mechanism underlying all gambling products, including binary event contracts — are designed to exploit.
Kalshi knows this. Its marketing choices demonstrate that it knows this. When a company saturates Instagram and TikTok — platforms whose user bases skew dramatically young — with advertisements for a binary betting product, it is not making a neutral business decision. It is making a deliberate choice to acquire customers in the demographic most likely to develop compulsive usage patterns. This is the same predatory logic that led regulators to restrict cigarette advertising near schools and ban alcohol advertising targeting college students. The Commission has the authority and the obligation to treat prediction market advertising with the same seriousness.
The Commission asks what "responsible gaming standards" it should consider. Here is what the evidence base supports as minimum standards — not aspirational best practices, but floors below which no operator should be permitted to function:
Mandatory deposit limits that users cannot override without a waiting period of no less than 72 hours. Mandatory session time limits with forced logout after extended engagement. Real-time loss alerts at defined thresholds. Integration with the National Council on Problem Gambling's self-exclusion database as a condition of account creation. A complete prohibition on bonus offers, referral incentives, and promotional credits — tools that every gambling addiction researcher recognizes as mechanisms for extending engagement past the point of rational decision-making. And a flat prohibition on marketing to anyone under 25 on any platform.
Kalshi has none of these. It has not voluntarily adopted any of them. The Commission has not required any of them. This is a public health failure, and it is happening in the Commission's jurisdiction.
The "Information Aggregation" Defense Is a Marketing Argument, Not an Economic One
The Commission asks, in questions 7 through 10, how event contracts contribute to price discovery and the management of commercial risk — the core public interest functions that justify the existence of derivative markets under the CEA.
Kalshi and its advocates argue that prediction markets serve the public interest by aggregating dispersed information into accurate probability estimates. Even accepting this argument on its own terms — and there are serious reasons not to — it does not justify the product as currently offered.
Academic prediction markets have existed for decades. The Iowa Electronic Markets has operated since 1990 under a CFTC no-action letter, with strictly enforced position limits of $500 per participant, specifically to preserve the information aggregation function while eliminating the incentive for large speculative positions that distort rather than improve price accuracy. The Iowa model works because small stakes mean that participants trade primarily to express genuine beliefs, not to profit or to manipulate.
Kalshi is not the Iowa Electronic Markets. Kalshi has no meaningful position limits on most contracts. Kalshi has no participant stake caps. Kalshi actively encourages large positions and frequent trading through its interface design and promotional structure. At that scale, the "information aggregation" function degrades: prices are driven by speculative momentum, coordinated positioning, and the behavior of large accounts — not by the dispersed genuine beliefs of informed citizens. The public interest rationale evaporates, and what remains is a gambling product.
The Commission's question 10 asks how the Commission should incorporate hedging considerations into its public interest determination. The answer, for retail prediction markets, is simple: there is no hedging. No one is buying a Kalshi contract on whether the Fed will cut rates to hedge an underlying commercial exposure. Retail participants on prediction markets are speculators, in the pejorative sense — they are bearing risk for the chance to profit, not transferring unwanted risk to a willing counterparty. The CEA was not written to legitimize that activity at retail scale on binary event contracts covering celebrity news and election outcomes.
Regulatory Arbitrage Is the Business Model
The Commission asks, in question 16, how it should handle event contracts that would be unlawful under some state laws but not others. This framing understates the problem dramatically.
Kalshi is not caught in an inadvertent jurisdictional complexity. Kalshi's business model was constructed from the ground up around the insight that CFTC registration could function as a preemption shield against state gambling laws. This was not a side effect of seeking CFTC oversight — it was the point. Kalshi sued the CFTC when the agency tried to restrict its political contracts, won on procedural grounds, and then used that victory to expand aggressively into precisely the contract categories regulators had tried to limit. That is not a company operating in good faith within a regulatory framework. That is a company that identified regulatory arbitrage as its core competitive advantage and has exploited it systematically.
Every state that has legalized sports betting — a product economically identical to most Kalshi contracts — has conditioned that legalization on consumer protection requirements that cost money to implement: licensing fees, responsible gambling funding, advertising restrictions, age verification infrastructure, problem gambling helpline funding, independent auditing. Kalshi has none of these costs because it convinced the CFTC that it is a commodity exchange rather than a gambling operator. That cost avoidance is not a regulatory benefit. It is a subsidy extracted from the public health system, which absorbs the costs of the addiction and financial devastation that unregulated gambling produces.
The Commission should treat this clearly: any event contract offered to retail participants that (a) carries no identifiable hedging function for that participant, (b) covers an event in which the participant has no underlying commercial exposure, and (c) is structured as a binary wager on an outcome the participant cannot influence, is gambling under any honest definition of that word. That the contract is listed on a CFTC-registered DCM does not change its character. The Commission should stop allowing its registration to change its legal treatment.
On the Manipulation and Inside Information Questions
The Commission devotes considerable attention in questions 29 through 32 to the risk of manipulation and insider trading. These concerns are real and serious, but I want to reframe them from a public health perspective that the Commission's analysis omits.
The manipulation problem is not only about wealthy sophisticated actors cornering a market for financial gain. The manipulation problem in prediction markets is also about ordinary people — young people, specifically — who follow prediction market prices as indicators of political reality and whose beliefs about that reality are shaped by prices that may reflect strategic manipulation rather than genuine probability assessments.
When a coordinated group of traders pushes a contract price on a political outcome to an artificially high or low level, they are not merely distorting a financial market. They are distorting the information environment that citizens use to understand their political world. Prediction markets have become, for a significant share of young Americans, a primary source of probabilistic information about political events. The Commission should recognize that allowing those markets to be manipulated — as they demonstrably can be — carries social costs that extend far beyond the financial losses of market participants.
This is an additional and independent reason to prohibit political event contracts entirely: they are too important to the information environment to be left in the hands of an unregulated speculative market, and they are too susceptible to manipulation to serve the information aggregation function that is used to justify their existence.
What the Commission Should Do
I recognize that the Commission is a financial regulator, not a public health agency, and that its statutory authority is defined by the CEA. But the CEA's public interest standard is broad, and the Commission has used it — or failed to use it — with real consequences for real people.
The Commission should:
Revoke Kalshi's DCM designation or initiate proceedings toward that end, on the grounds that its primary business consists of retail-facing binary gambling products that serve no legitimate economic purpose cognizable under the CEA and that are contrary to the public interest under CEA section 5c(c)(5)(C).
Categorically prohibit political event contracts under CEA section 5c(c)(5)(C). These contracts serve no hedging function, are acutely susceptible to manipulation and insider trading, and pose direct threats to democratic information integrity that fall squarely within the Commission's public interest mandate.
Immediately require any prediction market DCM serving retail participants to implement responsible gambling protections at least equivalent to those required under the strictest applicable state sports betting regulations — not as a future rulemaking objective, but as an immediate condition of continued DCM registration.
End self-certification for retail event contracts and require mandatory prior approval with public comment periods and explicit public interest findings.
Refer the question of Kalshi's preemption of state gambling laws to the Department of Justice for a formal legal opinion on whether CFTC registration constitutes federal preemption of state gambling statutes and, if not, what enforcement coordination between the Commission and state attorneys general should look like.
Conclusion
The Commission has asked the public what it should consider in regulating prediction markets. I have told you what I consider every week, in a clinical office, when I sit across from a 24-year-old who cannot explain to his parents where his tuition money went, or a 27-year-old who has not told her partner that they can no longer make rent.
I consider that Kalshi marketed to them relentlessly. I consider that Kalshi gave them a product indistinguishable from gambling and called it something else. I consider that no one required Kalshi to tell them what they were getting into, to limit how much they could lose, or to point them toward help when the losses became unmanageable.
And I consider that the Commission could have stopped this, and did not.
It can stop it now. It should.
