TLDR
- The CFTC received over 1,330 public comments on prediction market regulation, with a last-day surge of filings before the April 30 deadline
- Tribal governments and casino groups argue prediction markets are gambling and should fall under gaming law, not derivatives regulation
- Academics are split — some praise prediction markets for price discovery, while others flag $143 million in suspicious trading profits
- Senator Catherine Cortez Masto called prediction markets “nothing more than gambling” and cited national security risks
- Kalshi created an AI tool to generate supportive comments, but only about 15 of the last 120 filings came from it
The Commodity Futures Trading Commission closed its public comment period on prediction market regulation on April 30. The deadline triggered a wave of last-minute filings that revealed just how divided stakeholders are on the issue.
By midday on the final day, more than 60 new comments had been submitted. The day before saw over 80 filings. In total, the CFTC received around 1,330 comments.
The comments were part of the agency’s Advance Notice of Proposed Rulemaking, which asked for public input on how event contracts should be regulated under the Commodity Exchange Act.
Most of the submissions raised concerns about the risks of prediction markets. But a steady stream of support came from academics, researchers, and individual users who see value in the products.
Gambling or Financial Tool? The Core Dispute
The sharpest criticism came from tribal governments and casino industry groups. They argued that prediction markets are functionally the same as gambling and should not be regulated as financial derivatives.
The Fort McDowell Yavapai Nation said event contracts amount to interstate wagers. The Prairie Band Potawatomi Tribal Gaming Commission asked the CFTC to delay its rulemaking and consult with tribal regulators first.
The Casino Association of New Jersey said prediction markets are “functionally indistinguishable” from regulated sports betting. The group also warned they create a “two-tiered market” that pulls revenue away from licensed operators.
U.S. Senator Catherine Cortez Masto of Nevada echoed those concerns. She said event contracts tied to sports and casino games are “nothing more than gambling” and belong under the jurisdiction of tribes and states.
Earlier this year, Cortez Masto joined other lawmakers in warning the CFTC about contracts that could “incentivize” injury or death. She also flagged what she called “dangerous national security risks.”
The National Council on Problem Gambling said prediction market trading contains “the three core elements of gambling: consideration, chance, and prize.” The group called for safeguards including restrictions on margin trading and protections for minors.
The Institute of Internal Auditors raised concerns about the misuse of material nonpublic information. Its president, Anthony J. Pugliese, recommended that platforms be required to implement independent audit functions.
Academics and Supporters Push Back
On the other side, some academics defended prediction markets as useful tools for gathering information and forecasting events.
Harry Crane of Rutgers University said these markets help aggregate dispersed information and produce probabilistic forecasts that can inform decision-making.
Michael Li, an incoming Master in Public Policy student at Harvard Kennedy School, argued the public debate has been framed in unhelpful binaries. He called for a more nuanced look at event contracts based on their information structure and manipulation risk.
William Mayew of Duke University found that prediction market prices are informative but offer only limited added value beyond existing disclosures.
On the critical side, Joshua Mitts of Columbia Law School identified roughly $143 million in “anomalous” profits linked to suspicious activity across prediction markets. He warned that the same features that make these markets useful for price discovery also make them vulnerable to exploitation.
Supporters of prediction markets argued that overly strict rules could push users to offshore platforms, reducing transparency. Some called for regulation rather than outright prohibition, suggesting enhanced surveillance, clearer contract standards, and a system that separates high-risk from lower-risk event categories.
Reports recently surfaced that Kalshi built an AI-powered tool to help users generate supportive comments for submission to the CFTC. The tool lets users answer a questionnaire and then submit an AI-drafted comment directly. However, a review of the last roughly 120 comments found only about 15 were submitted through Kalshi’s page.
