Comment Text:
I am a college professor who has watched too many students get drawn into financial trouble through apps that look like investing but function like gambling.
Prediction markets like Kalshi are not true derivatives for price discovery or hedging. They are sports gambling in disguise. Sports events make up the overwhelming majority — often 70-90% — of trading volume on these platforms. Contracts on game outcomes, player props, spreads, and parlays behave exactly like bets on DraftKings or FanDuel, yet these companies use CFTC registration to sidestep state gambling laws, licensing, age restrictions, taxes, and consumer protections that legitimate sportsbooks must follow. This undermines state authority and creates a regulatory loophole that harms the public.
These platforms are especially predatory toward young people. They aggressively market on college campuses, use slick apps, and offer rapid-fire contracts that encourage impulsive, addictive behavior. As a college professor, I see the mental health impact firsthand: students chasing losses, neglecting schoolwork, and developing gambling problems at an age when their brains are still developing impulse control. Far too much responsibility is left in the hands of the platforms themselves to prevent manipulation, resolve disputed outcomes fairly, and protect users — and they have failed at it repeatedly.
The CFTC has clear authority under CEA section 5c(c)(5)(C) to determine that event contracts involving gaming are contrary to the public interest. These markets pose serious risks of market manipulation through inside information or coordinated trading, erode trust in financial markets, and prioritize platform profits over protecting retail participants, especially younger ones.
Stronger regulatory action is urgently needed: stricter listing standards that treat sports-heavy contracts as gaming, robust consumer safeguards, meaningful oversight instead of self-certification, and limits on products that clearly function as bets. Without it, these platforms will continue to expand unchecked, preying on the vulnerable while claiming innovation.
The Commission should rein them in now to protect market integrity and public welfare.
