CFTC warns of manipulation risks in prediction market 'mention markets'

The CFTC issued a staff advisory on Tuesday about prediction market contracts known as mention markets. These contracts cover what a named person may say or do. The CFTC is not banning the contracts. The advisory says mention markets differ from markets with independently generated and externally verifiable outcomes outside any single person's control. The outcome may instead depend on the conduct of a named person. That conduct may not be independently generated or externally verifiable. The person or people around that person could shift the outcome based on their knowledge of the betting. The CFTC's Division of Market Oversight may view these markets as presumptively readily susceptible to manipulation. The CFTC reminded prediction platform operators that they may trade only derivative contracts that are not readily susceptible to manipulation.