CFTC Warns Mention Markets Are Presumptively Vulnerable to Manipulation

On September 22, staff at the Commodity Futures Trading Commission (CFTC) informed exchanges that mention markets are presumptively prone to manipulation. While no outright ban was imposed, exchanges must address four specified factors if they wish to list such contracts.

A mention market is a binary contract that pays out if a specific word is uttered by a particular individual during an event such as a speech, earnings call, or social media post. This design gives the speaker, or someone close to them, the ability to influence whether the contract settles.

CFTC’s Basis for Presuming Manipulation Risk in Mention Markets

The advisory was sent by the CFTC’s Division of Market Oversight (DMO) to designated contract markets (DCMs), the exchanges registered with the agency.

Under Core Principle 3 of the Commodity Exchange Act, exchanges are prohibited from offering contracts that are easily susceptible to manipulation.

In contrast to typical prediction market contracts, which depend on outcomes like election results or economic data beyond any individual’s control, a mention contract settles based on a single person's behavior. That individual or their associates could potentially tip the result or gain advance knowledge of it.

The regulatory warning also extends to contracts on event attendance and personal interactions like handshakes.

The advisory gives an example of a livestreamed podcast host with a trademark catchphrase, noting that a trader could pay for a shout-out to influence the contract.

The risk has already surfaced in one case. On August 28, the CFTC fined former White House teleprompter operator Gabriel Perez $172,539.02. Perez traded contracts on whether the president would say certain words on Kalshi from December 2025 to February 2026, using his advance access to presidential speeches. The penalty includes disgorgement of profits, and Perez is banned from trading for three years.

What the Presumption of Manipulation Means for Listing

The advisory does not establish new legal requirements, nor does it necessarily reflect the position of the entire commission. Rather, exchanges may still list such contracts if they can rebut the presumption in their product submissions to the CFTC. Acting DMO Director Duncan Hennes signed the letter, placing the onus on exchanges to demonstrate that their contracts are not susceptible to manipulation.

“DMO staff may view Mention Markets as presumptively readily susceptible to manipulation and accordingly expect a heightened showing in support of any submission seeking to list such contracts.”

Duncan Hennes, Acting Director of the CFTC’s Division of Market Oversight, stated in the letter.

The agency noted that the four factors outlined are not the only ones to be considered. Among the factors, the speaker’s legal or professional obligations that discourage cheating, and their vulnerability to outside influence, are two key considerations.

Which Platforms Fall Outside CFTC Oversight?

Polymarket offers mention contracts solely on its international platform, which is not subject to CFTC regulation. Separately, a federal judge who halted Minnesota’s prohibition on prediction markets ruled that Kalshi’s mention contracts regarding World Cup announcers are probably not swaps, the category over which the CFTC has sole authority.

The unanswered issue is whether staff guidance can effectively regulate a product type that can migrate to platforms beyond the CFTC’s jurisdiction.