On September 22, 2026, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) issued CFTC Staff Advisory No. 26-27, providing the agency’s most detailed guidance to date on a fast-growing category of prediction market products known as “mention markets.” The advisory addresses event contracts that settle based on whether an individual will say or “mention” certain words, attend or appear at an event, or otherwise interact with another person. While the advisory does not ban these contracts outright or create new legal obligations, it establishes a framework of heightened scrutiny that designated contract markets (DCMs) should expect when listing or seeking to list such products.
What Are Mention Markets?
The staff advisory defines mention markets broadly as event contracts that settle based on the discrete conduct of a named individual. This includes contracts based on whether a specific person will use certain words or phrases in a public forum such as a speech, earnings call, or social media post, as well as contracts based on whether a person will attend or appear at an event, or interact with another individual, such as by shaking hands, being photographed together, or engaging on social media. The DMO distinguishes these contracts from the majority of event contracts currently listed on DCMs, which settle on independently generated, externally verifiable outcomes outside the control of any single person, such as economic data releases, election results, or the outcomes of regulated sporting events.
The staff advisory follows an earlier period of informal regulatory scrutiny. In August 2026, NPR reported that the CFTC had launched a non-public review of mention market contracts, examining whether products that allow traders to take positions on a public figure’s word choices are consistent with the agency’s regulatory framework. The September 22 staff advisory can be understood, in part, as a formalization of the concerns that emerged during that earlier inquiry, translating them into a structured set of expectations for DCMs going forward.
Kalshi, the largest prediction market operator in the United States, has previously removed mention markets tied to sporting events from its platform and has signaled a cautious posture. On the same day the advisory was released, Kalshi’s clearinghouse, Kalshi Klear, filed a separate request with the CFTC seeking authority for institutional traders to use margin on certain event contracts. Notably, a Kalshi spokesperson indicated that the company would not offer margin on its sports, culture, or mention market contracts under the proposed framework.
Polymarket, Kalshi’s principal competitor, continues to offer mention markets on its overseas platform, which is not registered with the CFTC, but does not list them on its smaller, CFTC-regulated U.S. service.
The Regulatory Framework: Core Principle 3 and Susceptibility to Manipulation
The advisory’s legal framework centers on DCM Core Principle 3 under the Commodity Exchange Act’s self-certification regime, which requires that each DCM list for trading only derivative contracts that are “not readily susceptible to manipulation.” The Commission’s guidance in Appendix C to Part 38 recognizes that cash-settled contracts, including event contracts, may create an incentive to manipulate or artificially influence the data from which settlement is derived, and it instructs DCMs to account for that possibility in product design and related safeguards. Applying that framework, the DMO staff stated that it may view mention markets as “presumptively readily susceptible to manipulation” and accordingly expects a “heightened showing” in support of any Part 40 filing seeking to list such contracts.
The advisory identifies several interrelated features that support this presumption. Because the outcome of a mention market contract is often within the control of a small number of actors, the settlement condition is comparatively easier to cause, prevent, or influence for personal gain. Those closest to the settlement outcome frequently possess advance knowledge, such as access to scripts, prepared remarks, guest lists, or unpublished content, which constitutes material nonpublic information and creates opportunities for trading advantages. These risks are compounded where mention markets settle on outcomes that lack independent verification or substantial public scrutiny. The advisory notes that words or conduct lacking substantive meaning within the context of the relevant event, such as an unrelated buzzword recited during an earnings call, may not attract meaningful attention and may therefore be more susceptible to manipulation.
From Enforcement to Guidance: The Perez Order
The staff advisory arrives against the backdrop of a recent CFTC enforcement action involving mention markets. On August 28, 2026, the CFTC issued a consent order against Gabriel Perez, President Trump’s former teleprompter operator, finding that Perez used advance access to prepared presidential remarks to trade “presidential mention market” contracts on Kalshi between December 2025 and February 2026. The Perez order requires disgorgement of $107,539.02 in trading profits and payment of a $65,000 civil monetary penalty, for total financial sanctions of $172,539.02, along with a three-year trading ban. KalshiEX assisted the investigation.
The order reflects the CFTC’s view that event contracts are swaps subject to the anti-fraud and anti-manipulation provisions of the Commodity Exchange Act. The Perez order applies the misappropriation theory of insider trading under Section 6(c)(1) and Regulation 180.1. The staff advisory issued on September 22 is the first formal, public position from DMO staff on how such contracts should be designed and submitted going forward, building on the enforcement approach reflected in the Perez order.
The Four-Factor Framework for Evaluating Mention Market Contracts
While the advisory establishes a presumption against mention markets, it also recognizes that whether a contract is readily susceptible to manipulation is a contract-specific determination. The DMO staff identifies four factors as “particularly relevant” to whether a DCM can rebut that presumption and list a mention market contract consistent with Core Principle 3:
- Independent obligations constraining the controlling individual. DCMs should consider whether the individual whose speech or conduct controls the outcome is subject to independent legal, professional, contractual, fiduciary, or organizational obligations that meaningfully deter conduct designed to affect settlement.
- Susceptibility to manipulation through external pressure. DCMs should assess whether a contract may be manipulated not only by the controlling individual but through that individual, by social engineering, inducement, or public pressure campaigns directed at the individual or at a person able to influence them.
- Independent verification and substantial public scrutiny. DCMs should evaluate whether the actions underlying the contract are subject to transparent, independent verification and contemporaneous, significant public scrutiny, including the materiality of the settlement-determining words or actions within their context.
- Robustness of prophylactic trading rules, surveillance, and controls. DCMs seeking to list any mention market contract must implement trading rules, surveillance, and controls reasonably designed to detect and deter manipulation, attempted manipulation, and misappropriation of nonpublic information.
The advisory also expects that any DCM seeking to list a mention market contract will demonstrate in its Part 40 filing that its surveillance and controls are sufficiently robust to overcome these heightened manipulation risks. This includes identifying potential controllers and known insiders, drawing on public officeholder and financial-disclosure sources for contracts involving public officials, or on exchange filings and other commercially available data for contracts involving corporate officers, and then designing position-limit, position-accountability, reporting, recordkeeping, and surveillance measures that are meaningfully calibrated to the risks those persons present.
What This Means for Prediction Market Operators and Compliance Teams
The staff advisory is expressly informational and does not create new binding rules or obligations. That said, the advisory’s practical significance is substantial. Prediction market operators, and the corporate compliance teams whose employees may be trading on these platforms, should take note of several key points:
- The presumption that mention markets are readily susceptible to manipulation means that any new or redesigned mention market contract will require a substantially more detailed Part 40 filing than the standard self-certification. DCMs should expect to provide a thorough evaluation of each of the advisory’s four factors and specify prophylactic measures with sufficient detail to permit staff assessment.
- Surveillance and compliance programs should be reviewed with mention market-specific risks in mind. The advisory calls for DCMs to identify potential controllers and known insiders and to implement position limits sized so that manipulation would be economically irrational, along with heightened surveillance around event windows. Existing programs designed for traditional derivatives may not be calibrated to the unique risks that mention markets present.
- Corporate employers should consider whether to treat prediction markets as a category requiring explicit coverage in insider trading and acceptable use policies, particularly where employees have access to nonpublic information that could inform a mention market bet involving their own organization or leadership. The advisory’s discussion of manipulation through external pressure, including social engineering, inducements, and public pressure campaigns directed at controlling individuals, underscores that risk is not limited to the person whose conduct determines settlement.
- DCMs are encouraged to engage with DMO staff in the early phases of designing mention market contracts to determine whether heightened manipulation risks exist and whether they may be mitigated with appropriate controls. The advisory expressly states that nothing in its guidance should be read to discourage innovation in prediction markets, and it recognizes that the Core Principles framework affords DCMs flexibility to develop new products while meeting their statutory obligations.
For further discussion about how these developments may affect your business, please contact Jeff Le Riche or Kip Randall.
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