CFTC warns mention-market contracts face heightened manipulation risk

The CFTC warns that prediction-market contracts tied to specific word mentions or event attendance face heightened manipulation risk. The CFTC issued the advisory through its Division of Market Oversight on Tuesday. The advisory says there are limited circumstances in which designated contract markets can list these contracts without violating the Commodity Exchange Act and agency rules. The CFTC previously charged a former White House teleprompter operator who allegedly used advance access to President Trump's speeches to profit from mention markets on Kalshi. The CFTC also charged former Rep. George Santos over statements he made two weeks before a State of the Union address about whether he would attend. The CFTC said those statements caused the event contract's price to increase or decrease significantly. The advisory says designated contract markets should assess whether people whose speech or conduct controls a contract's outcome face independent obligations that deter efforts to affect settlement. The CFTC says markets that list mention contracts should adopt proactive trading rules and controls. States have challenged the CFTC's broader role in regulating prediction markets. Some states argue that sports betting falls within their authority and that the contracts violate their gaming laws. Courts are still considering who regulates sports betting through prediction markets.