CFTC advisory urges prediction exchanges to identify mention-market insiders

The Commodity Futures Trading Commission's Division of Market Oversight issued a staff advisory on 22 September that strongly encouraged prediction-market exchanges to identify potential controllers and known insiders connected to certain mention, attendance and interaction contracts. The advisory addresses the risks those connections can pose when an individual's words or actions determine a contract's outcome, according to the advisory.

The advisory came after a case centred on Gabriel Perez, who ran the White House teleprompter. According to the CFTC, Perez exploited that position between December 2025 and March 2026 to bet on prediction markets tied to utterances by President Donald Trump. Regulators ordered him to give back $107,539.02 in profits, assessed a $65,000 civil penalty and barred him from trading for three years.

The advisory does not create new binding rules or regulations, according to the division. Exchanges are already required under current CFTC requirements to avoid listing contracts that are readily susceptible to manipulation, and the division's staff said they may view mention markets as presumptively readily susceptible to manipulation. The views in the advisory come from the division's staff and do not necessarily represent the views of the Commission, the advisory said.

The division's staff named four areas it called “particularly relevant” for exchanges assessing mention markets. First, obligations that could discourage whoever controls the outcome from manipulating it. Second, exposure to outside pressure or influence. Third, “Independent verification and substantial public scrutiny”. Fourth, how robust the exchange's trading rules, surveillance and other controls are. When contracts go to the division for review, staff expect exchanges to set out those safeguards, the advisory says.

Noah Solowiejczyk, a Fenwick partner, previously worked as a federal prosecutor coordinating investigations alongside the CFTC, SEC and other federal regulators. He told Gambling Insider that the standard is raised for exchanges listing mention markets. Such an exchange, he said, must be able to show it diligently fulfilled its duty to ensure the contract is not readily susceptible to manipulation. He also observed that, in light of the division's guidance, “A one-size-fits-all approach does not appear sufficient based on the DMO’s guidance”.

Tiffany Magri, a regulatory advisor at Smarsh, told Gambling Insider that the process begins at listing rather than with the trader. In her words, exchanges must map “who can determine or influence the outcome, and who has advance access to scripts, prepared remarks, or guest lists”. Public records, financial disclosures, corporate filings, and other commercially available data can help exchanges identify formal connections, she said, though private individuals such as a podcast host are tougher because those sources offer little.

Magri explained that today's monitoring tools were created for securities and traditional derivatives, where insiders connect to issuers and instruments. Mention markets instead hinge on what individuals do, she said, citing “a word said, an appearance made, or an interaction that occurs” as examples. Exchanges, she added, can only see what traders reveal and what is verifiable, and ties of an informal kind, including friends or family, prove much harder to uncover. Employment checks and surveillance of trading patterns may assist, she said, yet “none is sufficient alone”.

Magri said Kalshi has said its surveillance flagged the activity in the Perez case and that the CFTC credited its assistance. She said pattern monitoring can surface behaviour no list would catch but generates false positives and shows suspicious timing rather than why someone traded, and that a person who controls an outcome can act within entirely normal conduct, leaving the trade as the only signal.

Thomas Rietz, a finance professor at the University of Iowa, told Gambling Insider that traders who know private things about an outcome may help pricing accuracy, but that a trader who can control the outcome can take advantage of others by affecting the outcome itself. He said the incentive to influence an outcome depends on the potential profit, the impact of the outcome and how the market is structured, and that the first question is whether there is a real social benefit to aggregating information on a particular topic.