CFTC Staff Say Mention Markets Are Presumptively Open to Manipulation and Demand a Heightened Showing to List Them

The Commodity Futures Trading Commission's market oversight staff have told exchanges that contracts on whether a person will say a word, attend an event or shake a hand may be treated as presumptively readily susceptible to manipulation. The advisory lands less than a month after a White House teleprompter operator was fined for trading presidential mention markets on advance copies of speeches.

• The CFTC's Division of Market Oversight issued Staff Letter 26-27 on 22 September, addressing event contracts that settle on whether an individual will mention certain words, attend or appear at an event, or interact with another person
• Staff say they may view these "Mention Markets" as presumptively readily susceptible to manipulation under Core Principle 3, and expect a heightened showing from any designated contract market that submits one
• The letter sets out four factors that could rebut the presumption, including independent verification, substantial public scrutiny and surveillance calibrated to the named person and known insiders
• It follows the CFTC's 28 August order against Gabriel Perez, a White House teleprompter operator who made $107,539.02 trading presidential mention contracts on speeches he had seen in advance, a case in which the regulator thanked Kalshi for its assistance
• The advisory is staff guidance that creates no new obligations, but it arrives as the agency is already handling a backlog of insider-trading referrals from prediction market platforms

Market Oversight Staff Put the Burden on the Exchanges

The Division of Market Oversight (DMO) of the Commodity Futures Trading Commission (CFTC) published CFTC Letter No. 26-27 on 22 September, a staff advisory on "individual mention, attendance and interaction event contracts". It is addressed to designated contract markets (DCMs), the federally registered exchanges on which prediction markets in the United States operate, and is signed by Duncan Hennes, the division's acting director. Staff note that no swap execution facility currently lists event contracts, but say the same analysis would apply if one did.

The letter defines its subject broadly: contracts on whether a specific person will use certain words in a speech, on an earnings call or on social media, whether they will attend or appear at an event, or whether they will interact with someone, for example by shaking hands, being photographed together or engaging online. Most event contracts, staff write, settle on outcomes that are independently generated, externally verifiable and outside any single person's control, such as economic data, election results or regulated sporting events. Mention markets are different because settlement turns on "the discrete conduct of a named person".

That is the core of the concern. Under DCM Core Principle 3, an exchange may list only contracts that are not readily susceptible to manipulation. Because the outcome of a mention market can be controlled by one person, a small group, or anyone with access to or influence over that person, DMO staff say they "may view Mention Markets as presumptively readily susceptible to manipulation and accordingly expect a heightened showing" in any submission to list one under Part 40 of the Commission's rules. A footnote extends the concern beyond single individuals to small groups acting together.

The letter is specific about how the risk materialises. A podcast host can say a catchphrase at will, and a trader can induce it by submitting a question or paying for an on-air acknowledgment. People close to the event often hold scripts, prepared remarks, guest lists or unpublished content, which staff describe as material nonpublic information. Words that carry no substantive meaning in context, such as an unrelated buzzword recited on an earnings call, may escape scrutiny altogether.

Four Factors, and a List of Controls

Staff accept that the presumption can be rebutted "in limited circumstances" by a well-designed contract combined with trading rules, surveillance and controls. They name four factors: whether the controlling individual is bound by independent legal, professional, contractual or fiduciary obligations; how exposed the contract is to social engineering, inducement or public pressure aimed at that person; whether the underlying conduct is independently verifiable and subject to contemporaneous, significant public scrutiny; and how robust the exchange's own rules and surveillance are. Words or actions in informal or private settings, or involving non-public persons, are in DMO's view unlikely to meet the verification test.

Exchanges are "strongly encouraged" to identify potential controllers and known insiders, using financial-disclosure sources for public officials and exchange filings for corporate officers, and to calibrate position limits, reporting and surveillance to those people. The letter lists examples: restricted lists of participants with connections to a contract, third-party screening vendors, periodic employment-status checks, pop-up confirmations before trading, and monitoring for patterns such as heavy profits in the only category a participant trades or account funding just before an event. For a contract on a named official's attendance, staff suggest position limits "sized so that manipulation would be economically irrational relative to its cost". Independent obligations on the individual, the letter says, are not a substitute for the exchange's own measures.

The advisory cites the Commission's June 2026 proposal on prediction market public interest determinations, 91 FR 35806, which reached a similar view of sporting event contracts on discrete player actions. It is explicit that it creates no new obligations, provides no no-action position and represents the views of DMO staff rather than the Commission.

The Teleprompter Case Set the Scene

On 28 August the CFTC filed and settled charges against Gabriel Perez, who between December 2025 and February 2026 traded presidential mention market contracts while working as a teleprompter operator at the White House. According to the order, he had access to speeches before they were delivered and misappropriated that information in breach of a duty of trust and confidence. He was ordered to disgorge $107,539.02 and pay a $65,000 civil penalty, discounted for cooperation, and received a three-year trading ban. The CFTC credited KalshiEX with assisting.

The Presumption Changes Who Has to Prove What

DCMs normally list contracts by self-certification, and the question of how much scrutiny those filings receive has been a running dispute in Washington. This letter does not change the procedure, but it tells exchanges what staff will look for when they do look: a contract-specific analysis of each of the four factors and controls described in enough detail to be assessed. For a product category that has grown on volume and novelty, a presumption of manipulability means the exchange carries the argument. The letter does not say what happens to mention contracts already listed, and it is framed around new submissions, so the practical test will be whether staff use it to question existing products.

The Perez Case Shows the Scrutiny Test Is Not Enough on Its Own

Presidential speeches are about as publicly scrutinised as any event can be, which on the letter's own factors should count in their favour. The Perez order shows why staff also insist on insider identification: the risk in that case came not from the President's words being unverifiable but from a member of staff seeing them early. A teleprompter operator is not a name that appears in a financial disclosure, and the letter's emphasis on restricted lists, employment checks and third-party screening reads as a response to exactly that gap. The fact that the case began with an exchange's own surveillance supports the letter's premise that DCMs can detect this conduct. The CFTC's capacity to act on what they find, given the backlog of referrals and its reduced staff, is a separate question.

Earnings-Call and Influencer Contracts Look the Most Exposed

The letter's examples point at where the pressure will fall. Contracts on a buzzword in an earnings call, a phrase from a streamer or a gesture at a ceremony fail the materiality and scrutiny tests the staff describe, and in several the person who controls the outcome is reachable by traders. Contracts on formal statements by senior public officials, backed by insider screening and tight position limits, are the ones most likely to survive. That leaves platforms with a design choice rather than a ban, which is consistent with the Commission's wider approach, including its proposed rules on in-house market makers.

The advisory stops short of prohibiting mention markets. It makes them expensive to justify, and on the evidence of the teleprompter case, that is a burden the exchanges should have been carrying already.