The Commodity Futures Trading Commission has warned prediction market exchanges that event contracts based on what an individual says or does can carry a heightened risk of manipulation.
In a September 22 staff advisory, the CFTC`s Division of Market Oversight focused on what it calls “Mention Markets”. These include contracts asking whether someone will say a particular word or phrase, attend or appear at an event, or interact with another person.
The CFTC has not banned these contracts outright. Instead, the advisory outlines the limited circumstances in which they can be listed consistently with existing federal rules, and tells regulated exchanges to pay particular attention to manipulation risks.
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Why Is the CFTC Concerned About Mention Markets?
The central issue is how the outcome is determined. Many event contracts settle on independently generated and externally verifiable results, such as an election result on
politics prediction sites, economic data release or the outcome of a regulated sporting event.
Mention markets can work differently because the person at the center of the contract may be able to directly influence whether it settles Yes or No. For example, a contract could ask whether a podcast host will say a particular catchphrase during a livestream.
The host could intentionally say the phrase, while someone else could potentially try to induce the outcome by asking a pointed question or purchasing an on-air acknowledgement.
The concern isn't limited to speech either, as similar issues can arise when contracts depend on whether someone attends an event, appears in a photograph or interacts with another person.
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Advanced knowledge raises another potential issue, and it's not a theoretical one. In August, the CFTC took enforcement action against White House teleprompter operator Gabriel Perez, who had access to presidential speeches before they were delivered.
The regulator found that Perez used material non-public information to trade presidential mention market contracts between December 2025 and February 2026, generating more than $107,500 in profit.
He was ordered to disgorge $107,539.02, pay a $65,000 civil fine and accept a three-year trading ban. The CFTC credited prediction market operator KalshiEX with assisting its investigation.
What Does the CFTC Expect from Prediction Markets?
The advisory identifies several factors that regulated exchanges should consider before listing mention markets.
These include whether the person controlling the outcome has legal, professional, contractual, fiduciary or confidentiality obligations that deter manipulation. Exchanges should also consider whether outside parties could influence the individual through inducements, social engineering or public pressure.
Another factor is whether the determining action can be independently verified and receives enough public scrutiny to make manipulation easier to detect.
Finally, the CFTC expects exchanges to have trading rules, surveillance and other controls in place to identify manipulation, attempted manipulation and misuse of nonpublic information.
Mention Markets Not Prohibited
The advisory is significant but it isn't a new rule or blanket prohibition. It represents the views of the CFTC staff and does not itself create new legal obligations.
Regulated exchanges can continue to submit mention market contracts, but the Division of Market Oversight has made clear that those products may require a stronger, contract-specific justification.
Under Core Principle 3 of the Commodity Exchange Act, designated contract markets must list contracts that aren't readily susceptible to manipulation.
As prediction markets grow and expand into increasingly specific questions about speeches, appearances and interactions, the September 22 advisory shows that market integrity, and who can control the event being predicted, will be a central part of the CFTC`s scrutiny.
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