CFTC warns prediction market mention contracts carry higher manipulation risk

The Commodity Futures Trading Commission said Tuesday that socalled mention contracts in prediction markets face a greater risk of manipulation. The agency shared the view in a letter to regulated exchanges and market operators. Mention markets are contracts that settle based on whether specific words are used in a speech, earnings call, or TV appearance. The CFTC said these contracts can be easier to exploit because the outcome may depend on a person’s conduct rather than an independently verifiable event. The letter did not create new rules, but it outlined factors exchanges should review before listing these contracts, including outside obligations on the subject, possible pressure on their speech, whether the settlement event can be verified, and whether there are controls to detect manipulation. CNBC also noted that the agency had been reviewing the contract type and that some related products had already been pulled from the market.