CFTC issues warning over risky prediction market ‘mention’ contracts
The CFTC warned that prediction-market contracts tied to a person’s words or actions face a heightened risk of manipulation. Its Division of Market Oversight said “mention markets” — contracts based on whether someone says certain words, appears at an event, or interacts with another person — can only be listed in limited circumstances under the Commodity Exchange Act. The concern is that settlement depends on a person’s discrete conduct, which may not be independently generated or externally verifiable. The guidance comes amid growing scrutiny of market integrity and several cases involving alleged misuse of privileged information on prediction markets, including a former White House teleprompter operator penalized for trading on Trump speech-related contracts. Exchanges are advised to weigh oversight measures, verifiability, outside pressure on the subject, and the subject’s obligations before listing such contracts. CFTC Chair Mike Selig said the guidance provides needed regulatory clarity.
