The U.S. Commodity Futures Trading Commission (CFTC) has warned prediction-market operators that contracts tied to what a specific person will say or do may be particularly vulnerable to manipulation.

Prediction markets allow traders to buy and sell contracts tied to real-world outcomes, with prices moving as participants reassess the likelihood of an event. In an advisory, the CFTC said so-called “mention markets” differ from contracts whose outcomes are independently generated and externally verifiable because they depend on the actions of a named individual. The agency said these contracts may be “presumptively readily susceptible to manipulation,” reminding platforms that derivatives offered for trading must not be readily vulnerable to manipulation.

The CFTC did not ban mention contracts outright. Instead, it said platforms seeking to list them should demonstrate safeguards such as independent verification, substantial public scrutiny and monitoring for manipulation — effectively laying out the conditions platforms would need to meet to keep offering this category of contract.

The agency said contracts could be strengthened through external factors that make manipulation difficult or costly, limits on the ability of public pressure to influence an outcome, a formal public setting involving a public figure, and close monitoring of trading activity.

The warning comes as prediction markets, including Kalshi and Polymarket, expand the range of event-based contracts offered to traders. For platforms weighing new categories, the advisory signals that a contract's design — not just its subject matter — will be central to regulatory scrutiny.

The CFTC has also recently taken action against conduct involving inside knowledge, pairing written guidance with enforcement in the same area. A former White House teleprompter operator was penalized for betting on what President Donald Trump was expected to say. Kalshi recently imposed a lifetime trading ban on former U.S. Representative George Santos over allegations that he wagered on his own State of the Union appearance.

The developments follow a case study on enforcement action involving prediction-market insider trading: This Platform Sets Insider Trading Precedent on Enforcement Action for Prediction Markets. A related report covered the CFTC penalty against the White House worker: CFTC Hits White House Worker With Over $170K Penalty in Prediction-Market Insider Trading Case.

The advisory underscores a central challenge for prediction markets: contracts based on human behavior can create information and incentive advantages that are difficult to separate from ordinary trading. Whether platforms adopt the verification, oversight and monitoring safeguards the CFTC described will be a key factor in how mention contracts are listed going forward.