Comment Text:
Public Comment: RIN 3038-AF65 — Direct Rebuttal to Comment of Luana Lopes Lara, Co-Founder and COO, Kalshi Inc.
Submitted to: Christopher Kirkpatrick, Secretary of the Commission, CFTC
Re: Advance Notice of Proposed Rulemaking on Prediction Markets
Date: April 30, 2026
I am a college student and a Kalshi user. I have lost just over $3,000 on this platform — money I did not have to lose. I am submitting this comment because Kalshi's co-founder and COO, Luana Lopes Lara, just filed a 30-page comment telling the Commission that her platform operates in the public interest and that its existing framework is working. I am living evidence that it is not. I want to respond to her arguments directly, because several of them are misleading in ways the Commission deserves to have pointed out.
1. On the "Offshore" Threat: This Is Lobbying, Not a Public Interest Argument
Ms. Lopes Lara warns the Commission, repeatedly — at least five times throughout her submission — that restricting prediction markets will drive users to unregulated offshore platforms. She frames this as a consumer protection concern. The Commission should call it what it actually is: a threat.
The argument structure is this: regulate us leniently, or Americans will gamble somewhere worse. By this logic, no financial regulation could ever be justified, because a less regulated alternative will always exist somewhere. The Commission does not permit unlicensed securities dealers to operate freely on the grounds that investors might otherwise use offshore brokers. It does not permit unregistered futures commission merchants on the grounds that customers might turn to foreign platforms. The existence of a worse alternative has never been — and should not become — a sufficient argument against consumer protection requirements.
Ms. Lopes Lara knows this. The offshore argument is not a legal or public interest submission. It is a pressure tactic, and the Commission should treat it as such.
2. On Eliminating the Economic Purpose Test: She Is Asking the Commission to Rubber-Stamp Anything With Sufficient Demand
This is the most alarming argument in Ms. Lopes Lara's submission, and the Commission should read it carefully. She argues that the economic purpose test was repealed by Congress in 2000 and should not be reimposed. She then goes further, arguing that "market demand is itself evidence of utility" — that if enough people want to bet on something, that alone establishes its legitimacy as a derivative instrument.
Think about what this argument actually means. Under Ms. Lopes Lara's framework, the Commission's public interest authority is reduced to near-zero. Any gambling product with sufficient retail demand automatically qualifies as a legitimate derivative. There is no floor. There is no limiting principle. There is no contract Kalshi could propose that this argument would not justify, provided enough people wanted to trade it.
I am one of those people. I wanted to trade on Kalshi. I did trade on Kalshi. I lost $3,000. My demand for the product is not evidence that the product served my interests or the public interest. It is evidence that the product was successfully marketed to me. Those are not the same thing, and the Commission should not allow Kalshi to conflate them.
3. On Responsible Gambling: She Admits the Problem Exists, Then Asks to Keep the Solution Voluntary
In responding to question 11, Ms. Lopes Lara explicitly endorses deposit limits, self-exclusion programs, loss limits, and age verification. I want the Commission to sit with that for a moment. Kalshi's own co-founder is telling the Commission that these protections are sound practices that she supports.
Kalshi has been operating since 2021. It is now 2026. Five years. In those five years, Kalshi voluntarily implemented none of these protections in any meaningful, binding form — not deposit limits, not mandatory loss alerts, not self-exclusion integrated with national problem gambling registries, not advertising restrictions protecting users under 21.
Instead, Kalshi launched a college campus ambassador program, posting that "college campuses are the best place to spark new financial movements and will play a key role in bringing the next 100M users to prediction markets." It paid social media influencers, offered commissions to fraternities on new sign-ups, and sponsored parties targeting 18-to-21-year-old students. A Kalshi supervisor allegedly told a 19-year-old campus marketer to target students because they "spend money recklessly." ReadWrite + 2
That is what Kalshi's voluntary framework produced. The Commission should not grant Kalshi's request for principles-based guidance on consumer protection. It should mandate these protections immediately as a condition of continued DCM registration — because five years of voluntary standards have produced a campus marketing strategy targeting people exactly like me.
4. On "Gaming": She Is Rewriting the Statute to Save Her Business Model
Ms. Lopes Lara devotes more pages to the definition of "gaming" than to any other issue in her submission. The reason is transparent: sports betting constitutes more than 90% of activity on Kalshi's site and 89% of its revenue. If sports betting is "gaming" under CEA section 5c(c)(5)(C), Kalshi's business model is presumptively contrary to the public interest. So Kalshi needs sports betting to not be gaming. Hence thirty pages. Wikipedia
Her argument is that "gaming" should be interpreted narrowly to mean only casino-style games of pure chance — roulette, slot machines, lotteries — and that sports competitions, being determined by skill and performance rather than pure chance, fall outside the definition. This is a clever argument. It is also the argument that a company generating 90% of its revenue from sports betting needs to be true in order to survive. The Commission should weigh the argument accordingly.
More importantly, the courts that have actually examined this question have reached the opposite conclusion. Massachusetts obtained a preliminary injunction against Kalshi's sports contracts. An Ohio federal judge ruled Kalshi's products amounted to gambling subject to the Ohio Casino Control Commission. Maryland denied Kalshi's request for injunctive relief. Arizona filed criminal charges against Kalshi for operating an illegal gambling operation. Multiple judges in multiple jurisdictions, applying multiple legal frameworks, have concluded that what Kalshi sells is gambling. Ms. Lopes Lara's statutory interpretation argument asks the Commission to reach a different conclusion than every court that has examined the underlying conduct. That should tell the Commission something. WikipediaCNN
5. On Insider Trading: The Existing Framework Has Already Failed, on Kalshi's Own Platform
Ms. Lopes Lara argues in response to questions 29 through 32 that government officials and other potential insiders are already subject to sufficient oversight through ethics laws, financial disclosure requirements, and inspector general supervision. She argues that Kalshi's own surveillance program provides an additional layer of protection. She concludes that no additional regulatory intervention is necessary.
The CFTC's own Division of Enforcement documented two insider trading cases on Kalshi in 2025: a political candidate caught trading on his own candidacy, and a YouTube channel editor trading on markets related to that channel using advance knowledge of unpublished video content. Kalshi subsequently suspended three additional political candidates for betting on their own races. Commodity Futures Trading CommissionCNN
Five documented insider trading violations on a single platform in a single year. These are only the cases Kalshi detected and disclosed. The Commission should ask how many it did not detect. The ethics frameworks Ms. Lopes Lara cites did not prevent any of these violations. Kalshi's own surveillance caught them only because they were relatively obvious — high win rates on contracts directly tied to the trader's own race or employer. Sophisticated insider trading, by definition, looks less obvious. The existing framework is not adequate. The evidence of its inadequacy is in Kalshi's own enforcement record.
6. On Contract Resolution: She Describes a Framework That Does Not Match My Experience
Ms. Lopes Lara dedicates significant space to Kalshi's contract resolution framework, describing layered rules, independent Outcome Review Committees, and structural separation between resolution and commercial interests. She argues this framework is robust and principled.
As a user, I can tell the Commission what the resolution framework looks like from the other side. In January 2026, users who held correct positions on certain NFL bets were only repaid their original stake rather than their full winnings. Only after public backlash did Kalshi pay out. Kalshi faces a $54 million class-action lawsuit for allegedly refusing to pay approximately $77 million to users who correctly bet that Iran's Supreme Leader Khamenei would leave office, with plaintiffs alleging Kalshi invoked a death carveout rule after the fact to avoid the payout. WikipediaBlockonomi
Ms. Lopes Lara describes an Outcome Review Committee with independent Public Directors. What she does not explain is why that committee's framework produced a payout refusal that required a public shaming campaign to reverse, or why it generated a $54 million class action lawsuit from users who believed the resolution rules were applied against them after they had already won. The gap between the resolution framework she describes and the resolution outcomes users have actually experienced is not a minor discrepancy. It is the core of what users like me do not trust about this platform.
7. On the Self-Certification Process: She Wants to Keep the System That Let Her List 1,600 Contracts in One Year With One Day's Notice
Throughout her submission, Ms. Lopes Lara defends the existing self-certification framework and argues against mandatory prior approval for new contracts. She frames self-certification as a principled, effective system that has served the market well.
In 2025 alone, DCMs certified approximately 1,600 event contracts. Each of those contracts reached retail users like me with as little as one business day's Commission notice and no prior public interest review. Many of those contracts covered political outcomes, celebrity events, and sports results — products courts have since found to constitute illegal gambling in multiple states. Wikipedia
Ms. Lopes Lara's preferred system is one in which her company can list a gambling product, make it available to college students across the country, and process it through a Commission review window shorter than most universities' add/drop periods. The Commission should not preserve that system. It should require mandatory prior approval, public comment periods, and explicit public interest findings before any retail-facing event contract goes live.
8. Parting Thoughts
Ms. Lopes Lara's comment seems written by lawyers whose job is to protect a $22 billion company's regulatory authorization. My comment was written by a college student who lost $3,000 on that company's platform and who found out, only after the fact, that courts in four states have concluded the product I was using was likely illegal gambling.
The Commission asked for public comment. Kalshi responded by emailing its entire user base soliciting pro-prediction market submissions and building an AI tool at comments-campaign.kalshi.com designed to generate only supportive comments — no neutral option, no critical option, one direction only. That is not public engagement. That is a coordinated campaign to manufacture the appearance of public support for a regulatory outcome worth billions of dollars to Kalshi's investors.
I am asking the Commission to weigh Ms. Lopes Lara's thirty pages of careful legal argument against what she does not address: the college students targeted by campus ambassador programs, the users who were not paid their winnings until they complained publicly, the five documented insider trading violations, the criminal charges in Arizona, the injunctions in Massachusetts, the ruling in Ohio. Those are not theoretical public interest concerns. They happened. They are still happening. And they happened on a platform that Kalshi's own co-founder is now telling the Commission is operating exactly as it should.
It is not. The Commission should act accordingly.
