The Commodity Futures Trading Commission has cautioned prediction market operators about contracts that depend on the actions or statements of specific individuals, saying these markets can be particularly vulnerable to manipulation.
The contracts, commonly referred to as “mention markets,” allow traders to bet on whether a person will say or do something. The CFTC said they differ from conventional event contracts whose outcomes are independently produced and can be verified through outside sources.
In a staff advisory issued Tuesday, the agency said outcomes in these markets can hinge on the conduct of a named individual. That means the result may not be independently generated or externally verifiable, creating additional opportunities for the outcome to be influenced.
The CFTC’s Division of Market Oversight said such contracts may be considered “presumptively readily susceptible to manipulation.” The agency reminded operators of prediction platforms such as Kalshi and Polymarket that listed derivative contracts must not be readily susceptible to manipulation.
The guidance does not prohibit mention markets outright. Instead, the CFTC outlined several characteristics that could help reduce manipulation concerns when platforms design and submit these contracts for review.
The agency said independent verification and meaningful public scrutiny should be key components. It also identified several factors platforms should consider:
- External circumstances that make manipulating the result difficult or prohibitively costly.
- Protections preventing public pressure from influencing the individual’s conduct.
- A formal and publicly observable event involving a public figure.
- Active monitoring designed to identify potential manipulation.
The CFTC’s warning follows recent enforcement activity involving prediction markets. In one case, the agency penalized a former White House teleprompter operator for trading on information about what President Donald Trump was expected to say.
Kalshi separately imposed a lifetime ban on former U.S. Representative George Santos following allegations that he wagered on an event involving his own appearance at a State of the Union address.
The advisory underscores the CFTC’s concern that contracts tied directly to an individual can create conflicts when the person being referenced, or people close to them, may have information or influence that could affect the market outcome.
