Comment Text:
Prediction markets, in my mind, have great potential to enact change in American society. If election markets were to become fully legalized, I could see two routes forward that either make or break American democracy.
The first possibility I see is that this becomes legal, and immediately has drastic consequences. Americans stop going to the ballot box thinking about the policies they wish to see. Instead, some portion of Americans vote depending on their Kalshi accounts, swapping sides depending on how they could most directly profit. It wouldn't take many: Some state elections have been entirely determined by a few thousand voters. Imagine if those few thousand voters all checked their Kalshi accounts before heading into the booth. In the worst case scenario, even poll workers and government officials are incentivized to take candidates with a low probability of winning elections, and to "boost" them into higher and higher winning chances. In this country with a suddenly struggling democracy, election markets would fuel the fires of fascism, undermining the democratic process that we cherish and enjoy.
The second possibility is that you, the CFTC, have both the technical tools and legal expertise to find and prosecute insider trading. No person votes with their Kalshi account, and Kalshi's exchange doesn't even come to mind when the DNC or GOP decide which of their candidates to fund and support, and which not to. And the elected officials, foreign agents, and party members who would dare sabotage American elections turn back, lest they face the mighty wrath of the CFTC! Then, the genuine use of election markets can be seen -- rather than the market controlling elections, elections control the market. People who depend on a certain party staying in charge to maintain their rights, whether reproductive, religious, or otherwise, can protect themselves. When the people running the government change for the worse, Kalshi would provide a way to monetarily protect yourself.
The difference in these two outcomes, in my mind, relies directly on the CFTC. I don't know how much power you wield federally, or how the internals of your organization work, and I won't pretend to. So, I hope to give you a framework for a decision: If you feel confident that the CFTC can sufficiently protect elections from Kalshi's influence, today AND for the foreseeable future, then I would charge into election markets as the next step of helping the American people shield themselves. But if you look at your organization and doubt your ability to find all the Americans who change their vote for an election, or you doubt that you'll have the power to prosecute senators who might attempt insider trading, then I urge you to block these election contracts for the sake of free and fair elections.
Best of luck!
