The CFTC is investigating "mention markets" on forecasting platforms
The U.S. Commodity Futures Trading Commission (CFTC) is conducting an internal review of so-called “mention markets” on forecasting platforms, according to people familiar with the matter who spoke to CNBC. In these markets, traders place bets on whether a specific word will be mentioned in a speech, during a company’s earnings call with analysts and investors, or on a television broadcast.
According to one of CNBC’s sources, the CFTC notified the Kalshi platform of the investigation several weeks ago. Around the same time, Kalshi removed its sports-related “mention markets.” It is currently unclear whether the investigation pertains only to sports contracts or to all such markets regardless of topic. Kalshi and the CFTC declined to comment.
“Mention markets” are among the most frequently criticized offerings on prediction platforms. Critics believe they can be easily manipulated by a single person. According to Dune Analytics, trading volume for such contracts on Kalshi last month was about $3.3 million—significantly less than on larger cryptocurrency-related markets.
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In July, the CFTC announced that it was investigating a case involving a former teleprompter operator for U.S. President Donald Trump. According to the regulator, he allegedly earned $90,000 on Kalshi by placing bets on the content of Trump’s speeches. In December, Coinbase CEO Brian Armstrong listed several terms—including “bitcoin” and “ethereum”—at the end of an earnings call to demonstrate the potential impact on such bets.
Kalshi representatives deny that “mention markets” create significant new incentives for manipulation. Arjun Sawai, the company’s head of market operations, noted in a letter to the CFTC that these contracts are regulated, transparent, subject to position limits, and under supervision.
The review comes ahead of a meeting of the CFTC’s Advisory Committee on Innovation, scheduled for August 20. Topics for the meeting include prediction markets, artificial intelligence, and cryptocurrencies. Meanwhile, a Washington state judge has blocked the operation of several Kalshi markets, specifically those related to predictions, sports, and elections. The court ruling states that Kalshi is likely violating state law by operating as an illegal gambling platform.
