CFTC warns prediction markets over mention contracts

The U.S. Commodity Futures Trading Commission has warned federally regulated prediction markets that contracts settling on what named people say, attend or do may face a presumption of being readily susceptible to manipulation.

The CFTC’s Division of Market Oversight issued the staff advisory on Sept. 22, covering contracts based on specific words or phrases, event attendance, public appearances and interactions between individuals. The guidance applies directly to designated contract markets and describes only limited circumstances in which such products may satisfy existing federal market-integrity requirements.

Unlike a new Commission rule, the advisory is informational and expressly says it creates no new legal obligations. Exchanges remain responsible for complying with the Commodity Exchange Act, including Core Principle 3, which requires designated contract markets to list only derivatives that are not readily susceptible to manipulation.

CFTC says mention markets can be presumed manipulable

Mention markets differ from contracts based on election results, economic releases or regulated sporting outcomes because settlement can depend on conduct controlled by one named person or a small group, according to the advisory. The regulator cited examples involving speeches, earnings calls, social-media posts, event appearances, photographs and personal interactions.

CFTC staff said a person controlling an outcome could deliberately trigger it, prevent it from occurring or know the result before traders outside that person’s circle. A podcast host, for example, could say a word tied to a contract payout, while people with access to scripts, prepared remarks or guest lists might possess material nonpublic information before settlement.

For that reason, the Division of Market Oversight said it may view mention markets as “presumptively readily susceptible to manipulation.” The phrase represents staff’s regulatory view under Core Principle 3 and does not mean every contract in the category is automatically prohibited.

A designated market could rebut that presumption in limited cases by showing that its contract design and controls sufficiently reduce manipulation risks. Staff identified independent verification and substantial public scrutiny as central considerations when evaluating those products.

The advisory asks exchanges to examine whether the person controlling settlement faces legal, professional, fiduciary, confidentiality, contractual or organizational duties that discourage deliberate interference. Exchanges should separately consider whether outside traders could influence the individual through payments, social pressure, inducements or other forms of interference.

Public settings receive particular attention. CFTC staff said formal events involving public figures may provide stronger independent verification, while conduct occurring privately or involving non-public people can be harder to verify and monitor. Even a public speech may present concerns when a contract turns on an incidental word with little connection to the substance of the event.

Recent cases show how insiders can control outcomes

The advisory follows two CFTC enforcement cases involving traders whose own access or conduct affected event-contract outcomes.

On Aug. 28, the regulator ordered former White House teleprompter operator Gabriel Perez to disgorge $107,539.02 and pay a $65,000 civil penalty after finding that he used advance access to President Donald Trump’s speeches to trade presidential mention contracts. Perez received a three-year trading ban.

Between December 2025 and February 2026, Perez had access to presidential speeches before delivery because of his federal employment, according to the CFTC order. The Commission found he misappropriated that information and generated more than $107,500 in trading profits. The CFTC credited KalshiEX for assisting the investigation.

As previously reported, the White House speech betting case involving advance access to Trump’s remarks ended with Perez agreeing to more than $172,000 in disgorgement and penalties after the regulator completed its investigation.

A separate July case involved former Rep. George Santos. The CFTC found that Santos traded contracts on whether he would attend the 2026 State of the Union while making public statements about his own attendance plans.

The regulator said contract prices moved in directions favorable to Santos after several of his social-media statements. Its settlement required him to disgorge $17,569.98, pay a $17,500 civil penalty and accept a three-year trading ban.

Kalshi later imposed its own permanent suspension. Kalshi’s lifetime ban on Santos over the State of the Union market followed the federal enforcement action and covered his access to the exchange directly or indirectly.

Kalshi keeps some mention markets live under tighter scrutiny

The new guidance does not amount to an industrywide ban on mention contracts.

As of Sept. 23, Kalshi still displayed markets tied to what Trump would say during United Nations meetings, including contracts covering terms such as AI, NATO and ceasefire. Another contract covering Trump’s United Nations General Assembly speech had recorded nearly $194,000 in volume in the available snapshot.

CFTC filing records show Kalshi previously self-certified amendments covering contracts asking whether a specific word would be said by a person, including a separate template tied to Trump. Those amendments were recorded as certified in June.

The Sept. 22 advisory means future Part 40 submissions involving such products are expected to contain more detailed, contract-specific manipulation analysis. Staff encouraged platforms to identify potential controllers and known insiders, then calibrate position limits, reporting requirements, recordkeeping and surveillance controls around those risks.

Staff said independent obligations placed on the person controlling an outcome do not replace the exchange’s own market-surveillance duties. Exchanges seeking to list a mention contract are expected to explain how their rules can detect manipulation, attempted manipulation and misuse of nonpublic information.

Kalshi has already reduced its exposure to some parts of the category. CFTC review of mention markets prompted Kalshi to pull sports mention contracts in August while political and corporate versions remained available.

A separate development arrived on the same day as the new CFTC advisory. Kalshi Klear requested approval for a margin framework covering selected event contracts, but mention and culture markets were excluded from the proposed eligible group, according to its filing coverage.

Prediction-market rulemaking remains unfinished

The mention-market advisory sits alongside a separate CFTC rulemaking process covering event contracts more generally.

The Commission proposed amendments to Regulation 40.11 in June that would create a formal process for assessing contracts involving areas Congress specifically identified, including gaming, terrorism, assassination, war and activities unlawful under federal or state law. The proposal includes a 90-day review process and contract-specific public-interest factors.

CFTC data said trading volume on federally registered prediction markets surpassed $25 billion during 2025. The regulator described event contracts as a growing part of derivatives markets while noting that the figure remained small beside the roughly $31 trillion notional value of the overall futures market it regulates.

The Commission has not published a final version of the June prediction-market proposal as of Sept. 23. Its current 2026 final-rule list does not show a completed Regulation 40.11 rulemaking, leaving the Sept. 22 staff advisory operating under existing Core Principle 3 and Part 40 requirements.

The federal framework is developing while courts consider separate disputes over state gambling authority. On Aug. 28, the Ninth Circuit ruled that Kalshi had not shown Nevada’s regulation of its sports event contracts was likely displaced by the Commodity Exchange Act, allowing Nevada’s sports-related enforcement to continue while other issues returned to the lower court.

As previously reported, the Ninth Circuit’s Nevada ruling on Kalshi’s sports prediction contracts did not invalidate the CFTC’s prediction-market rules or decide how every category of event contract must be treated.

Polymarket’s U.S. operation is part of the federally registered market structure through QCEX. CFTC records show amendments to the Polymarket U.S. rulebook were certified in April, while QCEX has continued filing event products with the regulator during 2026.

For mention markets specifically, the next compliance step falls on designated contract markets when they submit new products or amendments under Part 40. The Sept. 22 advisory says staff expects each filing to provide a detailed evaluation of the manipulation factors and describe the controls intended to address them.