CFTC Warns Prediction Platforms of Manipulation Risks in ‘Mention Markets’

The Commodity Futures Trading Commission has warned prediction market operators about the heightened manipulation risks associated with contracts tied to the words or actions of specific individuals.

These markets, often called “mention markets,” allow users to trade on what a particular person might say or do. The CFTC said they present different risks from prediction contracts based on outcomes that are independently generated and can be verified externally.

In an advisory released Tuesday, the regulator said outcomes in these markets can depend on the actions of a named individual, meaning they may not be independently generated or easily verifiable.

That distinction could make it harder for certain contracts to satisfy the CFTC’s requirements. The agency oversees prediction market operators such as Kalshi and Polymarket and said its Division of Market Oversight may consider individual-behavior contracts “presumptively readily susceptible to manipulation.”

The CFTC reminded prediction market operators that they are permitted to list only derivative contracts that are not readily susceptible to manipulation.

The agency did not propose an outright ban on mention markets. Instead, it outlined conditions that could help reduce manipulation risks and make a contract more suitable for regulatory approval.

The CFTC said contracts in this category should include strong independent verification and substantial public scrutiny. Platforms should also consider several factors when designing and submitting these contracts for regulatory review.

Those factors include:

External conditions that make manipulating the outcome difficult or prohibitively expensive for the individual involved.
A market structure in which public pressure cannot influence the subject’s behavior.
A formal and public setting involving a public figure.
Close monitoring of trading activity for potential manipulation.

The regulator has already taken enforcement action involving this type of market. In a recent order, the CFTC penalized a former White House teleprompter operator who traded on information about what President Donald Trump was expected to say.

Another case involved former U.S. Representative George Santos. Kalshi recently imposed a lifetime trading ban on Santos following allegations that he placed bets connected to his own appearance in a State of the Union address.

The CFTC’s latest guidance signals that prediction contracts based on individual conduct may face additional scrutiny, particularly when the person involved could have knowledge of market positions or an ability to influence the outcome.