Prediction markets have become a focal point of discussion, particularly regarding controversial event contracts that allow users to profit if specific words or phrases are mentioned during significant speeches. This was brought to light recently due to the scrutiny surrounding Gabe Perez, a long-serving White House teleprompter operator, who has been placed on unpaid leave following allegations of making over a dozen trades linked to speeches by US President Donald Trump. Reports estimate that these trades garnered Perez approximately $100,000 on Kalshi. As a result, the US Commodity Futures Trading Commission (CFTC) is now reviewing these so-called "mention markets", according to NPR's report on August 13.
Karoline Leavitt, the White House Press Secretary who announced her resignation this week, condemned Perez’s actions, calling them a "disgrace." After Kalshi’s surveillance team detected a series of suspicious trades made by Perez, they froze around $90,000 of his potential winnings. This prompted Trump to order Perez’s leave, which led to an investigation by the federal regulator overseeing derivatives.
In another development, this year saw multiple prediction market operators extensively rolling out mention markets specifically tied to high-profile sporting events. For example, during the FIFA World Cup, these operators witnessed substantial trading volumes. However, Kalshi has since removed all sports-related mention markets in light of the recent events.
The CFTC has also taken steps to mandate regulatory adherence for self-certification of incentive programs in prediction markets. On August 12, the agency issued guidance instructing operators to comply with filing rules aimed at addressing procedural and substantive deficiencies that have appeared in an increasing number of self-certifications for incentive, liquidity, trading, and market-making programs. The CFTC emphasized that these programs affect trading behaviors and fee structures, and stressed the need for transparency in regulatory oversight.
In the realm of regulated prediction markets, designated contract markets (DCMs) are licensed under the Commodity Exchange Act. While they may implement varying fee structures for different traders, it is critical that these fees align with both the objectives of the program and standardized practices. The CFTC also advised against providing preferential treatment, including VIP access to products, without appropriate market disclosures.
Simultaneously, sportsbook VIP programs have faced heightened scrutiny recently. In the lead-up to the Major League Baseball All-Star Game, reports emerged about Bryce Harper of the Philadelphia Phillies creating a personalized video for a VIP bettor, Terry Thompson, thanking him for his loyalty. Subsequently, Thompson filed a lawsuit against FanDuel, asserting that the company enticed him back to the site through various VIP offerings. Thompson has indicated that he is undergoing treatment for a gambling addiction, claiming that it has led to losses totaling at least $1.5 million. In response, Senator Richard Blumenthal, along with two members of the US House of Representatives, reached out to the MLB Players Association, advocating for a ban on advertising related to VIP betting schemes.
Lastly, a report surfaced revealing that JPMorgan Chase & Co. ended its banking relationship with Polymarket in 2025 due to regulatory concerns. Polymarket, valued at approximately $20 billion, previously settled with the CFTC in 2022 for operating an unregistered platform, later receiving approval from the CFTC in September to relaunch its trading platform in the US. While Polymarket is currently searching for a new banking partner, it affirmatively stated that it maintains an active relationship with JPMorgan for various operations, including customer fund handling.
The dual-platform operation of Polymarket has drawn criticism, particularly in light of the CFTC Rule 40.11, which prohibits DCMs from listing event contracts related to war, assassination, or terrorism. Despite this, Polymarket continues to list contracts on its offshore platform, such as one regarding whether Luigi Mangione will stand trial in 2027. Mangione, who has admitted to shooting former UnitedHealthcare CEO Brian Thompson in 2024, is currently awaiting sentencing, with negotiations ongoing between his attorneys and prosecutors regarding his upcoming case.
