The US Commodity Futures Trading Commission (CFTC) has warned federally regulated prediction markets that contracts settled by what named individuals say, attend or do could be presumed to be readily susceptible to manipulation.
The agency’s Division of Market Oversight issued its staff advisory on 22 September. It covers contracts based on specific words or phrases, event attendance, public appearances and interactions between individuals.
The guidance is not a new Commission rule and creates no additional legal obligations. However, designated contract markets must continue to comply with the Commodity Exchange Act, including Core Principle 3, which requires them to list only derivatives that are not readily susceptible to manipulation.
The CFTC said so-called mention markets carry particular risks because their outcomes may be controlled by one person or a small group. Examples include contracts relating to speeches, earnings calls, social-media posts, photographs, event appearances and personal interactions.
A person who controls an outcome might deliberately trigger or prevent it, or know the result before other traders. A podcast host, for example, could say a word linked to a payout, while people with access to scripts, prepared remarks or guest lists might have material non-public information in advance.
The Division of Market Oversight said it may therefore regard mention markets as “presumptively readily susceptible to manipulation”. That is a regulatory view under Core Principle 3, rather than an automatic ban on every contract in the category.
Exchanges could rebut the presumption in limited circumstances by demonstrating that their contract design and safeguards reduce the risks sufficiently. The advisory highlights independent verification and substantial public scrutiny as important factors.
Designated contract markets are also expected to consider whether the person controlling settlement is bound by legal, professional, fiduciary, confidentiality, contractual or organisational duties that would discourage deliberate interference. They must assess separately whether traders could influence that person through payments, social pressure, inducements or other means.
The CFTC said formal public events involving public figures may be easier to verify than private conduct or actions involving non-public individuals. Even a speech can create concerns if a contract depends on an incidental word unrelated to the event’s substance.
Enforcement cases underline the concern
The advisory follows two enforcement cases involving traders whose access or actions affected event-contract outcomes.
On 28 August, former White House teleprompter operator Gabriel Perez was ordered to disgorge $107,539.02 and pay a $65,000 civil penalty. The CFTC found that he used advance access to President Donald Trump’s speeches to trade presidential mention contracts and imposed a three-year trading ban.
Between December 2025 and February 2026, Perez had access to the speeches before delivery because of his federal employment. The regulator said he misappropriated the information and made more than $107,500 in trading profits. The CFTC credited KalshiEX with assisting its investigation.
In a separate July case, former Rep. George Santos traded contracts on whether he would attend the 2026 State of the Union while making public statements about his plans. The CFTC said prices moved in his favour after several social-media posts. Santos was ordered to disgorge $17,569.98, pay a $17,500 civil penalty and accept a three-year trading ban.
Kalshi later permanently suspended Santos from accessing the exchange, directly or indirectly.
The advisory does not amount to an industry-wide prohibition. As of 23 September, Kalshi was still displaying markets linked to what Trump would say during United Nations meetings, including contracts involving AI, NATO and ceasefire. One market covering Trump’s United Nations General Assembly speech had recorded almost $194,000 in volume in the available snapshot.
CFTC records show Kalshi had self-certified amendments for contracts asking whether a particular person would say a specific word, including a template connected to Trump. Those amendments were certified in June.
Future Part 40 submissions involving such products are expected to include more detailed, contract-specific analysis. Exchanges have been encouraged to identify potential controllers and insiders, then set position limits, reporting, record-keeping and surveillance measures accordingly.
The CFTC said obligations imposed on the person controlling an outcome do not replace an exchange’s own responsibility to monitor its market. Platforms must explain how their rules can detect manipulation, attempted manipulation and misuse of non-public information.
Kalshi removed sports mention contracts in August after CFTC scrutiny, although political and corporate versions remained available. On the same day as the advisory, Kalshi Klear sought approval for a margin framework covering selected event contracts; mention and culture markets were excluded from the proposed eligible group.
Wider prediction-market rules remain unresolved
The advisory forms part of a wider, unfinished process covering event contracts. In June, the CFTC proposed amendments to Regulation 40.11 that would establish a formal review process for contracts involving gaming, terrorism, assassination, war and activities unlawful under federal or state law. The proposal includes a 90-day review period and contract-specific public-interest considerations.
CFTC data showed trading volume on federally registered prediction markets exceeded $25bn during 2025. The regulator described event contracts as a growing part of derivatives markets, while noting that the figure was small compared with the roughly $31tn notional value of the overall futures market it regulates.
As of 23 September, the Commission had not published a final version of the June proposal, and its 2026 final-rule list did not show completed Regulation 40.11 rulemaking. The 22 September advisory therefore operates under existing Core Principle 3 and Part 40 requirements.
Separately, on 28 August, the Ninth Circuit ruled that Kalshi had not shown Nevada’s regulation of its sports event contracts was likely displaced by the Commodity Exchange Act. Nevada’s sports-related enforcement could continue while other issues returned to the lower court.
Polymarket’s US operation is part of the federally registered market structure through QCEX. CFTC records show amendments to the Polymarket US rulebook were certified in April, while QCEX continued filing event products during 2026.
For mention markets, the next compliance stage will apply when designated contract markets submit new products or amendments under Part 40. The CFTC staff advisory says each filing should provide a detailed assessment of manipulation risks and the controls intended to address them.
