CFTC sets High Bar for Kalshi, Polymarket over 'mention-market' Contracts

The CFTC's Division of Market Oversight posted an advisory on Tuesday flagging prediction market 'mention' contracts as readily susceptible to manipulation.

Staff told designated contract markets (DCMs), the CFTC-regulated exchanges that list derivatives, that contracts tied to 'the discrete conduct of a named person' carry heightened manipulation risk because the underlying conduct may be neither independently generated nor externally verifiable. The advisory reminds DCMs they are only permitted to trade 'derivative contracts that are not readily susceptible to manipulation.'

What the advisory does, and does not, do

The advisory does not ban mention markets outright. It sets a high bar for permitting them: contracts should feature 'independent verifiability and substantial public scrutiny as essential attributes,' and DCMs listing them should put proactive trading rules and controls in place to block manipulation.

The advisory is aimed at prediction-market operators including Kalshi and Polymarket. It does not shut down Kalshi's active contract on what U.S. President Donald Trump will say at the United Nations.

The enforcement backdrop

The CFTC has charged a former White House teleprompter operator who, the agency said, used advance access to President Trump's speeches to profit from mention markets on Kalshi. The operator was ordered last month to return $107,539 in profits and pay a $65,000 civil penalty.

The CFTC separately charged former Rep. George Santos, alleging he made public statements two weeks before a State of the Union about whether he would attend, moving the event contract price 'significantly'. Kalshi recently issued Santos a lifetime trading ban.

Where this sits inside the broader review

CNBC and NPR reported in August that the CFTC had already opened a review into mention-market contracts, prompting Kalshi to remove 'mention markets' tied to sporting events 'until further notice' while the inquiry ran. The Tuesday advisory formalizes what that review had been probing.

Separately, the Wall Street Journal reported, that in August nearly one million trades worth more than $5 billion were made in a single Kalshi market tied to the price of Ether, with more than a third occurring in nearly identical amounts of around $5,500. Kalshi has rejected suggestions the activity amounted to wash trading.

Jurisdiction is still unresolved

The CFTC has asserted a leading role in regulating prediction markets, but states argue sports betting contracts fall within their remit and violate state gaming laws, per The Block. The question of which authority regulates sports betting via prediction markets is still being worked out in the courts, per The Block.

CFTC Chair Mike Selig welcomed the advisory in an X post on Tuesday, calling it guidance that reminds DCMs of their obligation to list only contracts not readily susceptible to manipulation, and framing it as 'regulatory clarity' that drives 'sound markets'.