The news
On September 22, 2026, the Commodity Futures Trading Commission's Division of Market Oversight issued a staff advisory warning prediction markets that mention markets, contracts that settle on what a specific person says or does, may be presumed readily susceptible to manipulation.
The advisory, CFTC Staff Letter No. 26-27, signed by acting division director Duncan Hennes, covers event contracts based on whether an individual will say certain words, attend or appear at an event, or interact with another person. It is addressed to designated contract markets (DCMs), the CFTC-registered exchanges that list event contracts.
Most event contracts settle on outcomes that are independently generated and verifiable, such as economic data releases, elections or regulated sporting events, the staff wrote. Mention markets differ because settlement turns on the conduct of a named person, who, along with people close to them, may be able to influence the result or trade on advance knowledge of scripts, prepared remarks or guest lists.
The letter gives examples, including a podcast host saying a catchphrase and an unrelated buzzword recited on an earnings call. Staff said they may treat such contracts as presumptively susceptible to manipulation and will expect a heightened showing from any exchange seeking to list them.
To overcome that presumption, exchanges should weigh, among other things, four factors: whether the person is bound by legal, professional or contractual duties; whether outsiders could pressure that person; whether the outcome is independently verifiable and publicly scrutinized; and how strong the exchange's trading rules, surveillance and controls are. Staff said the list is not exhaustive.
Suggested controls include restricted lists of connected traders, screening for links between individuals and contracts, periodic employment-status updates and pop-up confirmations before trading. For a contract on whether a named public official attends an event, staff said measures might include position limits sized so that manipulation would be economically irrational. The advisory is informational, creates no new obligations and reflects only the views of division staff, not necessarily those of the Commission.
The numbers
- CFTC staff letter
- No. 26-27
- Key factors staff listed (not exhaustive)
- 4
- Core Principles DCMs must meet
- 23
Why CEOs should care
For general counsels, CFOs and investor relations teams at public companies, this is a reminder that event contracts can be written on your executives' words. Staff specifically cited earnings calls and said people with access to scripts or prepared remarks hold material nonpublic information. Review whether insider-trading and communications policies cover prediction market contracts, and tell employees who see earnings scripts or event guest lists that trading on them is off limits.
For prediction market operators and the brokerages that distribute their contracts, the compliance bar has risen for this product type. Staff strongly encouraged exchanges to identify likely insiders, drawing on financial disclosures for public officials and exchange filings for corporate officers, and to calibrate position limits and surveillance to those people, and they expect any filing to detail its safeguards. Product and compliance teams should audit existing mention, attendance and interaction contracts against the four factors before regulators do.
For boards and risk committees, the advisory highlights reputational exposure. Because staff flagged people close to a speaker as possible targets of pressure and holders of nonpublic information, a company whose executive's words settle a contract could be drawn into a manipulation inquiry without having listed or traded anything itself.
The bigger picture
The advisory lands as prediction markets face closer scrutiny. The CFTC proposed rules on prediction markets and public interest determinations in June 2026, according to the letter. The newsletter This Week in Fintech reported on September 25 that Kalshi, valued at $22 billion after a $1 billion funding round, faced Wall Street Journal allegations of wash trading, trades designed to inflate volume, in its ether perpetual futures market, which Kalshi denied. Former CFTC attorney Joe Konizeski told the publication the allegations could give the agency reason to investigate.
The letter also signals how staff may judge other novel event contracts. Staff said their concerns are not limited to a single person: a small group acting together could create comparable manipulation risks. They added that the same analysis would apply to swap execution facilities, although none currently list event contracts.
What’s next
Because the advisory is not binding, the real test will come in how CFTC staff respond to new contract filings and whether exchanges delist or redesign existing mention markets. Watch for final action on the June prediction market proposal and any enforcement tied to event contracts.
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