The Commodity Futures Trading Commission has raised concerns over prediction market contracts that depend on what a particular person says or does, warning that such markets can be especially exposed to manipulation.

These contracts, known as “mention markets,” allow traders to speculate on the behavior or statements of named individuals. The CFTC said they differ from event contracts whose outcomes are generated independently and can be verified by outside sources.

In a staff advisory issued Tuesday, the regulator said the outcome of a mention market can hinge on the conduct of the person named in the contract. Because that individual may have the ability to affect the result, the outcome may not be independently generated or externally verifiable.

The agency’s Division of Market Oversight said these contracts could therefore be viewed as “presumptively readily susceptible to manipulation.” The CFTC reminded prediction market operators, including Kalshi and Polymarket, that their derivative contracts must not be readily susceptible to manipulation.

Rather than banning mention markets, the CFTC outlined safeguards that could make individual-based contracts less vulnerable to interference. It said independent verification and substantial public scrutiny should be important elements of any such market.

The regulator identified several considerations for platforms when designing and submitting these contracts:

• External circumstances that would make it difficult or prohibitively expensive for the subject to influence the outcome.
• Measures that limit the effect of public pressure on the individual’s behavior.
• A formal, public setting involving a public figure.
• Close surveillance of trading activity for signs of manipulation.

The advisory follows recent enforcement action involving insider knowledge. The CFTC recently penalized a former White House teleprompter operator who traded on information about what Trump was expected to say.

Kalshi has also taken action against former U.S. Representative George Santos, imposing a lifetime trading ban after allegations that he placed wagers connected to his own appearance at a State of the Union address.

The CFTC’s guidance highlights the additional scrutiny that can apply when prediction contracts are directly linked to an individual whose actions can determine the market’s outcome.