The US Commodity Futures Trading Commission has warned prediction market operators that event contracts tied to an individual's words or actions carry heightened manipulation risk.
The CFTC's Division of Market Oversight issued the advisory on Tuesday. It covers mention contracts—instruments that settle based on whether a person says certain words, appears at an event, or makes contact with another individual. The regulator considers such contracts more vulnerable because their outcome depends on discrete actions by an individual that may not be independent or externally verifiable.
The CFTC reminded exchanges that Core Principle 3 of the Commodity Exchange Act requires listing only contracts that are not readily susceptible to manipulation. The regulator proposed four factors for assessing mention markets: the individual's external commitments, external pressure on their speech or behavior, the ability to independently verify words or actions, and the presence of oversight measures to detect manipulation.
Interest in the issue grew after the case of Gabriel Perez, who operated the teleprompter for President Donald Trump. In August the CFTC ordered Perez to pay $172,539 for insider trading on mention contracts tied to Trump's statements.
Kalshi, one of the few US-regulated operators of such contracts, removed sports mention markets after a CFTC review. A Kalshi spokesperson, Elisabeth Diana, said the company has incorporated the regulator's guidance. Kalshi's competitor Polymarket offers mention markets through an offshore exchange not subject to CFTC jurisdiction.
