Comment Text:
Comment on Advance Notice of Proposed Rulemaking – Prediction Markets (RIN 3038-AF65)
I am a college student from Florida. In the past year I lost $1,900 trading on Kalshi. The financial loss was bad enough, but the constant anxiety, sleepless nights, and distraction from my studies have taken a real toll on my mental health.
Kalshi and similar platforms are not offering legitimate derivatives for price discovery or risk management. They are running sports gambling under the regulatory cover of the CFTC. Multiple independent analyses show that sports-related event contracts account for 68% to as high as 91% of Kalshi’s total trading volume, depending on the period — overwhelmingly driven by NFL, college football, player props, spreads, and parlays. These contracts operate identically to bets on traditional sportsbooks, yet Kalshi uses its CFTC-registered status to claim federal preemption and operate nationwide, even in states like Florida that maintain their own gambling frameworks.
This model hands far too much unchecked power to the platforms themselves. Kalshi exercises broad discretion to:
*Issue material clarifications to contract terms late in the trading window or after markets close;
*Pause and resume trading unilaterally;
*Provide selective refunds in some cases while denying them in others;
*Modify market titles and resolve markets controversially, sometimes to a vague “fair value” instead of the last traded price, with little transparent methodology.
These practices demonstrate the risks of relying on self-regulation under CEA Core Principles 2, 3, and 4 (enforcement of rules, contracts not readily susceptible to manipulation, and effective surveillance). When the overwhelming majority of activity is gaming-like and the operator retains wide latitude over outcomes, timing, and settlements, the potential for arbitrary decisions and unfair treatment of retail participants increases substantially.
CEA section 5c(c)(5)(C) expressly allows the Commission to determine that event contracts involving “gaming” (or similar activities) are contrary to the public interest and prohibit them from trading on registered entities. Given the dominant sports volume, the predatory targeting of younger users, documented impacts on mental health and financial well-being, and ongoing conflicts with state gambling laws, the Commission should use this authority aggressively.
At minimum, sports-heavy event contracts should be barred or subjected to strict limits, enhanced resolution standards, position accountability for retail traders, and real consumer protections. If these platforms cannot operate without functioning as unregulated sportsbooks, they should not operate in their current form.
The CFTC must protect retail users — especially young people — and prevent prediction markets from becoming a loophole that evades the consumer safeguards, licensing, and responsible gaming measures that apply to every other form of sports wagering. Stronger action, up to and including prohibition of gaming-like contracts, is necessary and fully justified under the CEA.
