Comment Text:
I am submitting this comment as a private citizen. I will be brief.
Prediction markets are gambling. The Commission should say so plainly and regulate them accordingly rather than allow the industry to borrow the credibility of legitimate commodity markets to avoid that label.
The societal damage is already measurable. Monthly trading volume on platforms like Kalshi and Polymarket grew from under $100 million in early 2024 to over $13 billion by November 2025. The National Council on Problem Gambling estimates that 2.5 million Americans currently have severe gambling problems and nearly 20 million showed signs of problematic behavior in 2024 alone. Prediction markets are accelerating that trend while presenting themselves as something intellectually serious.
The forecasting justification does not hold up. Vanderbilt researchers analyzed over 2,500 political prediction markets from the 2024 election involving more than $2 billion in transactions. Accuracy on Polymarket sat at 67 percent. Prices for identical contracts diverged across exchanges and arbitrage opportunities actually increased in the final weeks before Election Day. These are not efficient information markets. They are speculative platforms that create the appearance of data while producing noise.
The threat to democratic integrity is documented as well. A single trader spent between $25 and $30 million on 2024 presidential contracts. A published paper in Science found this kind of concentrated trading can produce measurable bandwagon effects on actual voter behavior by shifting perceived candidate viability. Reuters and CNN now display prediction market odds alongside real economic indicators. Speculation is being laundered into fact.
The CFTC has a responsibility to protect the integrity of commodity markets. Allowing prediction market platforms to operate under the same regulatory umbrella muddies the purpose and public trust of those markets entirely. These contracts serve no hedging function. They transfer money from the uninformed to the well positioned and generate fees along the way.
The Commission should reject broad legitimization of these products. If any event contracts are permitted they should require demonstrated economic purpose, strict participant transparency, and enforceable prohibitions on trading based on nonpublic information.
Respectfully,
