Prediction markets, particularly those involving event contracts based on specific words or phrases spoken during high-profile appearances, have drawn significant debate. Recently, these "mention markets" faced intense scrutiny when it was reported that Gabe Perez, a long-time teleprompter operator at the White House, was placed on unpaid leave. Allegations surfaced that he had made over a dozen trades based on speeches made by former President Donald Trump, reportedly earning around $100,000 on the prediction platform Kalshi. Following this, the U.S. Commodity Futures Trading Commission (CFTC) initiated a review of mention markets, as highlighted by NPR on August 13.
Karoline Leavitt, the White House Press Secretary, who announced her resignation this week, termed Perez a "disgrace" concerning his alleged actions. Kalshi’s surveillance team detected unusual trading activities by Perez and subsequently froze approximately $90,000 in potential gains. Perez was also instructed to take a leave of absence by Trump, which prompted the federal regulator's examination of derivatives.
As prediction markets have gained popularity this year, operators have increasingly rolled out mention markets, particularly during major sporting events. For example, millions were wagered on these contracts during the FIFA World Cup. Following the allegations against Perez, Kalshi has since removed all sports-related mention markets.
Neither the CFTC nor Kalshi have publicly commented on the review.
In a related development, on August 12, the CFTC released new guidance aimed at addressing issues related to the self-certification of incentive programs on prediction markets. The guidance serves to reinforce operators' need to adhere to regulatory requirements when filing self-certifications for various incentive programs, including market-making and liquidity initiatives. The Commission cited an "increasing number" of submissions that had "procedural or substantial deficiencies," aiming to enhance transparency and regulatory scrutiny.
Designated Contract Markets (DCMs) are regulated prediction markets that operate under the Commodity Exchange Act. While DCMs can implement varied fee structures for traders, these fees must be reasonable and consistent with the program's intended goals. The CFTC advises against giving preferential treatment, emphasizing that all market participants should receive equal access to information regarding products.
In the past weeks, there has been heightened focus on sportsbook VIP programs as well. Just ahead of the Major League Baseball All-Star Game, it was reported that Philadelphia Phillies player Bryce Harper recorded a personalized video for a VIP bettor, Terry Thompson, thanking him for his loyalty. Thompson has launched legal action against FanDuel, asserting that the company lured him back to its platform with VIP benefits while he battled gambling addiction, which he claims led to losses exceeding $1.5 million. Recently, Senator Richard Blumenthal, along with two House Representatives, sent a letter to the MLB Players Association urging a ban on advertising connected to VIP betting programs.
Additionally, a report revealed that JPMorgan Chase & Co. ended its banking relationship with Polymarket in 2025 due to regulatory concerns. Polymarket, which is aiming for a valuation of around $20 billion, previously settled with the CFTC in 2022 for operating without a proper license. The CFTC permitted Polymarket's relaunch of a U.S. platform last September, distinct from its international offering. While JPMorgan refrained from commenting, Polymarket stated that it still maintains an active relationship with the bank for managing customer fund transactions.
Polymarket continues to face criticism over its offshore platform in light of CFTC Rule 40.11, which prohibits DCMs from offering event contracts related to warfare, assassination, or terrorism. Recently, the offshore platform listed a contract concerning whether Luigi Mangione would stand trial in 2027. Mangione had admitted to shooting Brian Thompson, the former CEO of UnitedHealthcare, in 2024, and now awaits sentencing in December. Just before a scheduled hearing, the probability of a trial in 2027 fell sharply as attorneys engaged in negotiations with prosecutors regarding the case.
