CFTC Warns of Manipulation Risks in Prediction-Market Mention Contracts
United States.- 24 September 2026 | www.zonadeazar.com The Commodity Futures Trading Commission, CFTC, has issued new guidance for US prediction markets concerning “mention markets”, event contracts whose outcomes depend on an individual’s words, appearances or actions.
The regulator considers these products to carry heightened manipulation risks and has outlined factors exchanges should assess before listing them.
What Are Mention Markets?
Contracts can settle based on questions such as:
- Whether an individual says a particular word.
- Whether a specific phrase is used.
- Whether someone attends or appears at an event.
- Whether two people interact.
- Whether a predefined action occurs.
Settlement therefore depends directly on individual conduct.
Heightened Manipulation Risk
The CFTC said that characteristic can make mention markets particularly vulnerable.
In some circumstances, the individual who determines the outcome may have direct influence over whether a contract settles successfully.
Outcomes May Not Be Independently Generated
The Division of Market Oversight warned that these contracts can rely on conduct that is not independently generated.
This can create opportunities for people with privileged information or influence to obtain an advantage.
External Verification
A key consideration is whether the relevant action can be objectively confirmed.
Exchanges should assess whether the words, appearances or interactions used for settlement can be verified through independent and reliable sources.
Core Principle 3
The regulator reminded Designated Contract Markets, DCMs, of their obligations under Core Principle 3.
Registered exchanges may only list contracts that are not readily susceptible to manipulation.
Contract-by-Contract Assessment
The advisory does not impose an automatic ban on every mention market.
However, the CFTC said such products may only be listed in limited circumstances and where exchanges can demonstrate compliance with the Commodity Exchange Act and Commission regulations.
Four Key Factors
The advisory identifies four broad areas that exchanges should assess:
- External obligations affecting the individual.
- Outside pressures capable of influencing conduct.
- Independent verification of settlement events.
- Surveillance measures capable of detecting manipulation.
Individual Obligations
Exchanges should consider whether the person who determines settlement has professional, contractual or other reasons to behave in a particular way.
Those circumstances can materially affect market integrity.
External Pressure
Platforms should also examine whether third parties may influence the relevant speech or conduct.
Financial incentives, employment relationships or other pressures could increase manipulation risk.
Market Surveillance
The CFTC expects exchanges to maintain tools capable of identifying suspicious activity.
Surveillance should address risks including:
- Insider trading.
- Manipulation.
- Misuse of non-public information.
- Coordinated trading.
- Direct influence over settlement.
Filing Requirements
When a DCM submits mention-market contracts under Regulations 40.2 or 40.3, the exchange must provide a complete and contract-specific analysis.
Broad assessments covering an entire product category may not be sufficient.
Early Engagement With the CFTC
The regulator also encouraged exchanges to consult the Division of Market Oversight during early product development.
The objective is to identify potential manipulation risks before contracts reach the market.
Gabriel Perez Case
Regulatory concern over mention markets intensified following an insider-trading enforcement case.
In August, the CFTC sanctioned Gabriel Perez for using non-public information obtained through his work as a White House teleprompter operator.
Advance Knowledge of Speeches
Perez had access to presidential speeches before they were delivered.
The CFTC found that he used that information to trade contracts based on words or phrases that would subsequently appear in those speeches.
More Than $107,000 in Profits
The Commission determined that Perez generated $107,539.02 in profits from the activity.
He was ordered to disgorge the full amount.
Civil Penalty and Trading Ban
Perez was also ordered to pay a $65,000 civil monetary penalty.
The settlement included a three-year trading ban.
Combined disgorgement and penalty amounted to approximately $172,539.
Kalshi and Mention Markets
Kalshi has previously offered mention contracts through its federally regulated exchange.
During 2026, the company removed certain sports-related mention markets while federal regulators reviewed the product category.
Kalshi’s Response
Following publication of the advisory, Kalshi said it had already addressed the guidance following previous discussions with the CFTC.
The company continues to operate as a federally regulated Designated Contract Market.
Polymarket
Polymarket also offers certain mention markets through its international exchange.
That international venue is not regulated by the CFTC as a US Designated Contract Market.
Wider Prediction-Market Enforcement
The advisory forms part of a broader increase in regulatory attention.
During 2026, the CFTC has addressed issues including:
- Insider trading.
- Material non-public information.
- Incentive programmes.
- Manipulation.
- Novel event-contract structures.
Industry Context
Rapid prediction-market growth is requiring regulators to address products that do not always fit established derivatives structures.
Mention markets are particularly complex because the person whose conduct determines settlement may sometimes know in advance — or potentially influence — the final outcome.
Next Steps and Impact
Federally regulated exchanges will need to conduct more detailed assessments before submitting future mention markets.
The CFTC has not prohibited the category outright, but it has made clear that listing will depend on strict safeguards covering product design, independent verification and market surveillance.
The guidance marks another stage in the development of US prediction-market regulation, with product expansion increasingly accompanied by targeted controls against insider trading and manipulation.
Editó: @fonta
