CFTC warns prediction markets of manipulation risks in ‘mention’ contracts

The U.S. Commodity Futures Trading Commission (CFTC) has issued a staff advisory warning that ‘mention markets’—prediction contracts that settle based on whether a specific person says a word, attends an event, or performs an action—are ‘presumptively readily susceptible to manipulation.’

Unlike traditional derivatives tied to independent economic data, mention markets rely on the discrete conduct of individuals. This creates risks where the subject of the contract, or those with access to non-public information like speechwriters or teleprompter operators, could influence the outcome to benefit trades. The CFTC cited a case involving former White House teleprompter operator Gabriel Perez, who was ordered to pay over $172,000 in penalties after using non-public access to speech content to trade on Trump-related mention contracts.

The advisory does not ban these products but raises the regulatory bar. Regulated exchanges must now provide detailed evidence that such contracts are not easily manipulated, ensuring they are independently verifiable and subject to robust surveillance. This comes as the prediction market industry, including platforms like Kalshi and Polymarket, sees rapidly increasing weekly transaction volumes.