Federal regulators have initiated a probe into “mention markets” operating on prediction market platforms, a burgeoning category where individuals wager millions of dollars on the specific words uttered by public figures, including politicians and sports commentators. The inquiry, confirmed by two individuals with direct knowledge of the investigation who spoke to NPR on the condition of anonymity, is examining whether these markets are susceptible to manipulation.
Kalshi Removes Sports Mention Markets
In response to the Commodity Futures Trading Commission’s (CFTC) inquiry, Kalshi, the largest prediction market operator in the United States, has temporarily removed all mention markets related to sporting events from its offerings. While sports betting typically focuses on game outcomes, mention markets have seen a rise in popularity, allowing users to bet on whether a sportscaster might use terms like “MVP,” “ankle,” or “redshirt.” These markets have been taken down “until further notice,” and their future on the platform remains uncertain.
Sports wagers constitute over 80% of the billions of dollars traded weekly on Kalshi. The removal of sports-related mention markets is expected to have a notable impact on the platform’s revenue from this segment. However, Kalshi continues to permit wagers on spoken words in political events, corporate earnings calls, and live television newscasts.
White House Incident Sparks Scrutiny
The intensified regulatory attention on this controversial aspect of the prediction market sector follows a high-profile incident involving betting on presidential remarks. Regulators recently disclosed that President Trump’s long-serving teleprompter operator had utilized Kalshi to profit by accurately predicting specific words the president would or would not use during public appearances. Kalshi stated that its internal surveillance systems flagged these unusually well-timed bets and subsequently reported them to federal authorities.
“These mention markets are not popular across the political aisle,” one source familiar with the probe commented, highlighting concerns about their potential for manipulation. “They are potentially very easy to manipulate, so the CFTC is taking a hard look at whether some of them make sense.” Spokespeople for both Kalshi and the CFTC declined to comment on the ongoing investigation.
The Mechanics of Mention Markets and Manipulation Concerns
Kalshi’s primary competitor, Polymarket, also offers mention markets, but exclusively on its international platform, which is not subject to CFTC regulation. Polymarket’s U.S. service, which is regulated, does not list mention markets. The majority of prediction markets operate under a “self-certified” model, where platforms can launch markets after filing paperwork with federal officials, asserting compliance with rules for “swaps” – a type of financial derivative.
A key requirement for these markets is that they must not be “readily susceptible to manipulation.” However, there is growing concern among Kalshi’s legal team and federal regulators that certain types of speaking events, by their very nature, may attract individuals seeking to exploit or rig the markets. This concern was echoed by a former Kalshi employee who spoke on condition of anonymity due to fear of retaliation.
Within Kalshi, there have been internal discussions regarding the utility of mention markets. According to the former employee, Kalshi co-founder Luana Lopes Lara has been a proponent, viewing betting on words spoken at award shows, reality television programs, or earnings calls as a strategy to attract new users to prediction markets beyond sports enthusiasts. Sports betting, while dominant on the platform, has also subjected Kalshi to numerous lawsuits from states and tribal entities.
Preposterous Outcomes and Market Resolution
The nature of betting on literal speech has led to unusual outcomes. During a live broadcast of the World Cup final on Fox, significant sums were wagered on who would attend the event. When a Fox sportscaster mistakenly identified Matt Damon as Brad Pitt, several news organizations erroneously reported Pitt’s attendance. Some of these news outlets serve as “source agencies” for Kalshi, tasked with verifying market outcomes. In this instance, the Kalshi market settled on Pitt’s attendance, adhering strictly to its contractual rules, despite the actor not being present. Data from Kalshi indicates that bettors who wagered on Pitt not attending collectively lost $287,866.
