The Zhitong Finance App learned that US Commodity Futures Trading Commission (CFTC) staff warned in the latest guidance that predictive market transactions involving betting on what famous people might say in public have a high risk of manipulation and can only be provided under limited circumstances.
This guidance is the latest step for regulators to restrict forecasting the explosive growth of the market sector. Earlier, the CFTC presented a proposal in June to combat bets related to war and terrorism. The new guidance does not have the legal effect of a formal regulatory agency rule and is applicable to a niche area in the forecasting market. In these markets, users can trade “yes” or “no” for future events such as sports and politics.
So-called “mention markets” (mention markets) bets involve words or phrases traders may say during speeches, earnings calls, or post-match press conferences. The CFTC said in a statement on Tuesday: “Such contracts have a higher risk of manipulation because their settlement depends on a person's specific behavior, which may neither be independently generated nor verified by external means.”
The guidance notes that obtaining speeches, prepared statements, or undisclosed content creates a trading advantage, and states that this “makes the individuals concerned more susceptible to others trying to manipulate the results, whether through social engineering, inducement, or public pressure activities.”
“Mention the market” bet was at the core of the CFTC's investigation into the trading behavior of a White House teleprompter operator. The person is accused of using insider information to bet on what US President Trump will say in his speech on the prediction market platform Kalshi, and made a profit of more than 100,000 US dollars. In August of this year, he agreed to pay more than $172,000 to settle the charges brought by regulators, but the CFTC did not acknowledge the charges against him.
The National Football League (NFL) asked the CFTC to ban such bets in the field of sports in July, saying that content mentioned in related broadcasts and similar bets could easily be manipulated by a single person. Major League Baseball (MLB) is also calling on the CFTC to tighten bets on words spoken during press conferences or post-game interviews.
The guidance lists the limited circumstances in which such transactions are permitted, including protective measures against potential manipulation, such as whether the individuals involved in the bet are under any legal or professional obligation to prevent it from affecting the outcome. The guidance also said that any exchange providing “reference to the market” must implement relevant rules, monitoring mechanisms, and control measures to detect and curb manipulation.
The CFTC is facing criticism, and outsiders believe that its support for the federally regulated prediction market has enabled gambling to flourish and even enter states where gambling is prohibited. The CFTC and prediction market platforms argue that these event contracts are financial derivatives and are fundamentally different from traditional gambling, so the agency should be responsible for supervision. States objected to this and filed lawsuits against related companies, alleging that these platforms actually constituted an illegal gambling business. Both Kalshi and Polymarket have voiced opposition to insider trading and are actively monitoring the market while providing clues to law enforcement and federal regulators.