US regulator says exchanges must clear a higher bar before listing event contracts that settle on a named person's words or actions
The United States Commodity Futures Trading Commission put prediction market exchanges on notice Monday that a growing class of event contracts - those settling on whether a named individual says certain words, appears at an event or interacts with another person - carry a presumptively elevated risk of manipulation and will face stricter regulatory scrutiny before they can be listed for trading.
The Commodity Futures Trading Commission's Division of Market Oversight issued a staff advisory on September 22, 2026, telling designated contract markets, or DCMs, that these so-called Mention Market contracts are presumptively susceptible to manipulation under Core Principle 3 of the Commodity Exchange Act, the provision that prohibits exchanges from listing products that are readily susceptible to manipulation.
That shifts the burden onto the platform to make an affirmative case that adequate safeguards exist before any product submission will be accepted.
As Wealth Professional has reported, the Canadian Investment Regulatory Organization authorised two firms - Interactive Brokers Canada and Wealthsimple - to offer event contracts to Canadian retail investors as of March 26, 2026.
Wealthsimple's Predict app, launched in partnership with Kalshi - the leading US prediction exchange - gives Canadian investors access to nearly 4,000 event contracts, though only within the economic, financial markets and climate categories approved by CIRO. Sports and political contracts remain off limits for Canadian users.
The CFTC advisory does not ban Mention Market contracts outright or create new legal obligations, but it makes plain that the commission will apply considerably more scrutiny to any event contract in which a single person's conduct determines the outcome, rather than an externally generated and independently verifiable data point such as an interest rate decision or an election result.
The gap between those two categories is the heart of the regulator's concern.
Most event contracts currently trading on prediction platforms settle on outcomes that no single market participant controls.
Whether a podcast host uses a particular catchphrase during a live stream, whether a corporate executive shakes hands with a named counterpart at a conference, or whether a public figure attends a specific event, each of these outcomes can be directly caused, prevented or manipulated by the person themselves, or by anyone with advance knowledge of their plans. That advance knowledge is material, non-public and often held by a small circle of people.
Setting a precedent
On July 31, 2026, the CFTC settled its first-ever enforcement action alleging market manipulation in a prediction market, finding that former Rep. George Santos had traded an event contract based on his own attendance at the 2026 State of the Union address while posting misleading statements on social media designed to move the contract's price.
Santos was ordered to return $17,569.98 in profits and pay a $17,500 civil penalty and accepted a three-year ban from trading on CFTC-registered platforms, a case that the new advisory appears partly designed to address at the product design level.
The September 22, 2026 advisory sets out four factors regulators will weigh when assessing any Mention Market contract submission.
Whether the individual whose conduct controls settlement is subject to independent legal, professional or fiduciary obligations that create a meaningful deterrent against manipulation.
Whether the contract is vulnerable to manipulation not just by that person directly, but through external pressure on them; social engineering, inducements or organised public pressure campaigns. Whether the relevant conduct is subject to independent verification and substantial public scrutiny, a bar the CFTC indicates will be difficult to clear for actions taken in informal or private settings or by individuals who are not public figures. And whether the exchange has implemented surveillance and position-limit controls that are specifically calibrated to the individual risks each contract presents.
CIRO and the Canadian Securities Administrators have continued to review the terms under which event contracts may be offered to retail investors. The Ontario Securities Commission's existing ban on Polymarket - which runs until 2027 following a 2025 settlement - illustrates that Canadian regulators are prepared to act where they see compliance gaps, even for platforms that fall outside the CIRO framework.
Since January 2025, the CFTC has approved 12 new designated contract markets as the prediction market sector has expanded rapidly in the United States, with more than 1,600 event contracts listed by 2025 across categories ranging from financial indices and climate to politics, culture and sport.
More than 10 bills targeting the sector have been introduced in the US Congress since January 2026. The CFTC's own enforcement division, meanwhile, has been managing that expansion with a headcount that former enforcement director Ian McGinley noted publicly was under 100 people.
