CFTC Warns Prediction Markets Over Manipulation Risks

The Commodity Futures Trading Commission issued a staff advisory on September 22, 2026, warning regulated contract market entities that mention market contracts are presumptively susceptible to manipulation. These contracts settle based on the discrete conduct of individuals, such as using specific words in a speech or attending an event, which the agency notes may not be independently verifiable.

While the advisory does not ban these products, it shifts the burden of proof to designated contract markets to demonstrate that adequate safeguards exist before listing such contracts under the Commodity Exchange Act. The agency will evaluate submissions based on risk factors including the subject's fiduciary obligations, vulnerability to proxy pressure, and the availability of oversight measures.

The regulatory shift follows several high-profile manipulation scandals. Gabriel Perez, a former White House teleprompter operator, settled with the agency in August after using nonpublic access to Donald Trump's speech materials to trade mention markets, paying a total of $172,539 in fines and returned profits. Former Representative George Santos was also penalized, ordered to return $17,569.98 in profits and pay a $17,500 civil penalty for trading on his own attendance at the 2026 State of the Union.

In response to the scrutiny, the prediction market platform Kalshi removed sports-related mention markets and issued a lifetime ban to George Santos.