The Commodity Futures Trading Commission (CFTC) Division of Market Oversight has told every designated contract market that contracts settling on whether a named person says a word, turns up or shakes a hand are presumptively “readily susceptible to manipulation” — shifting the burden of proof for mention markets from the traders who abuse them to the exchanges that list them.

CFTC Staff Letter No. 26-27, issued on September 22, 2026 and signed by Acting Director Duncan Hennes, applies Core Principle 3 of Section 5(d)(3) of the Commodity Exchange Act (CEA) to what it calls “Mention Markets” and says staff “may view Mention Markets as presumptively readily susceptible to manipulation and accordingly expect a heightened showing in support of any submission seeking to list such contracts” (CFTC Letter No. 26-27). This analysis sets out what the advisory requires, how its four rebuttal factors compare with gambling-integrity regimes in Ontario, Great Britain and the European Union, and what it means for exchanges, brokers and compliance teams.

Methodology and sources: reading the letter, not the headlines

This analysis rests on primary documents. The core text is the six-page CFTC Letter No. 26-27, read in full, including its 15 footnotes, which carry most of the operational detail. It is set against the settled orders in Docket Nos. 26-05 (Santos) and 26-06 (Perez), the Division of Enforcement’s February 25, 2026 advisory, the Part 40 proposal at 91 FR 35806, Regulations 40.2 and 40.3 on eCFR, and Chairman Michael S. Selig’s August 20, 2026 remarks. Comparators are Standard 4.34 of the Alcohol and Gaming Commission of Ontario (AGCO) Registrar’s Standards for Internet Gaming, Section 42 of Great Britain’s Gambling Act 2005, Gambling Commission Licence Condition 15.1.2, and the European Securities and Markets Authority (ESMA) July 2026 statement on event contracts. The time window runs from February 25, 2026 to September 24, 2026. The Perez order itself was analysed in our earlier piece on why a speech draft became inside information; this article is about the exchange-side listing obligation that followed it.

What Letter 26-27 actually says about listing mention markets

The advisory is short, and most of its force sits in three moves. First, it defines its subject broadly: event contracts “based on whether an individual will say or ‘mention’ certain words, attend or appear at an event, or otherwise interact with another person”. Footnote 5 extends the analysis beyond single individuals to “a small or select group of individuals acting together, or with a shared purpose”. Footnote 4 notes that no swap execution facility currently lists event contracts, but says the analysis applies to them too.

Second, it draws the line that the rest of the letter depends on. Most listed event contracts, staff write, settle on outcomes that are “independently generated, externally verifiable” and “outside the control of any single person, such as economic data releases, election results, or the outcomes of regulated sporting events”. Mention Markets settle instead on “the discrete conduct of a named person”. That distinction matters because Appendix C to Part 38 already instructs DCMs to account for the incentive to manipulate the data from which a cash-settlement price is derived. In a mention market, the settlement data is a human being.

Third, it sets the presumption and the rebuttal. Staff “may view Mention Markets as presumptively readily susceptible to manipulation”, but “in limited circumstances, a well-designed contract coupled with DCM trading rules, surveillance, and controls may be sufficient to rebut the presumption”. Four factors govern that rebuttal: independent legal, professional or fiduciary obligations constraining the controlling individual; susceptibility to external pressure directed at that individual; independent verification and “substantial public scrutiny”; and the robustness of the DCM’s prophylactic trading rules, surveillance and controls.

A CFTC mention-market presumption is a staff position, set out in CFTC Letter No. 26-27 of September 22, 2026, that event contracts settling on whether a named person says specific words, attends an event or interacts with someone are presumed “readily susceptible to manipulation” under DCM Core Principle 3 in Section 5(d)(3) of the Commodity Exchange Act. The presumption is rebuttable. A designated contract market that wants to list such a contract must show, in its Part 40 filing, that the controlling individual faces independent obligations that deter manipulation, that the contract resists outside pressure on that person, that the settling words or conduct are independently verifiable and publicly scrutinised, and that its own surveillance and trading rules can detect insider trading and manipulation. The letter is informational, creates no new binding rule and grants no no-action relief, but it tells exchanges exactly what staff will look for before they review a self-certified listing.

The letter says it “does not create new obligations” and “represents only the views of DMO staff”. That is accurate as a matter of law. In practice, a DCM self-certifying under Regulation 40.2 must certify that the product “complies with the Act and Commission regulations” and provide an explanation that is “complete with respect to… the product’s compliance with applicable provisions of the Act, including core principles”. A certification that ignores a published staff presumption on the very core principle in question is the kind of filing that invites the Commission’s stay power under Regulation 40.2(c) during proceedings for a false certification.

How four jurisdictions treat contracts one person can control

Jurisdiction / Regulator	Effective date	Scope	Key requirement	Penalty / sanction
US (CFTC, DMO)	Letter 26-27, September 22, 2026	DCMs listing mention, attendance and interaction event contracts; analysis also applies to SEFs	Rebuttable presumption of manipulability under CEA Section 5(d)(3); four-factor showing in Part 40 filings	Trader liability under CEA Section 6(c)(1) and Regulation 180.1: Santos $17,500 CMP; Perez $65,000 CMP, each with a three-year trading ban
Canada, Ontario (AGCO)	Registrar’s Standards for Internet Gaming, Standard 4.34 (amended February 2022)	Registered operators offering sport, esports and novelty event betting	Every bet must have an outcome that “can be generated by a reliable and independent process” and “is not affected by any bet placed”	Registrar action against registration under the Gaming Control Act, 1992
Great Britain (Gambling Commission)	Gambling Act 2005, Section 42; LCCP Condition 15.1.2	Betting operating licensees and any person who cheats at gambling	Licensees must report suspected offences “as soon as reasonably practicable” and suspicions that may lead to voiding under Section 336	Cheating: up to two years’ imprisonment on indictment (Section 42(4))
EU (ESMA and national authorities)	ESMA public statement, July 3, 2026; national binary-option measures since 2018	Event contracts that meet the MiFID II financial-instrument definition	Treated as binary options and barred from sale to retail clients under national product intervention measures	National competent authority sanctions under MiFIR product intervention powers

Sources: CFTC Letter 26-27; AGCO Registrar’s Standards for Internet Gaming; Gambling Act 2005, Section 42; LCCP Condition 15.1.2; ESMA statement. Last updated: September 24, 2026.

The closest analogue to Letter 26-27 is not American. Ontario’s Standard 4.34 has, since its February 2022 amendment, required that the outcome of any event bet “can be documented and verified”, “can be generated by a reliable and independent process” and “is not affected by any bet placed”. Read side by side, DMO’s language — outcomes that are “independently generated” and “externally verifiable” — is close to a restatement of the Ontario test. The difference is in the legal form. Ontario applies an eligibility rule: a bet that fails it cannot be offered. The CFTC applies a presumption that a well-engineered contract can overcome, which preserves the federal model of exchange self-certification under Part 40.

Great Britain takes a third route. The Gambling Act 2005 does not bar novelty markets on what a public figure will say; instead it criminalises cheating, defined in Section 42(3) to include “actual or attempted deception or interference in connection with… a real or virtual game, race or other event or process to which gambling relates”, and it relies on operators to report. Condition 15.1.2 obliges betting licensees to pass the Commission any information they know or suspect relates to an offence, or that may lead it to void a bet under Section 336. Britain polices outcomes after the fact; Ontario filters products before listing; the CFTC now asks exchanges to filter so enforcement has less to police.

The European Union largely removes the question at the retail level. As we reported when ESMA said the binary-options ban already covers event contracts, an event contract that qualifies as a financial instrument is a binary option, and national measures bar its sale to retail clients. That produces the arbitrage risk the CFTC letter implicitly acknowledges: CNBC reported on September 22, 2026 that Kalshi is one of the few US-regulated platforms offering mention markets and that its rival Polymarket features them only on its international exchange, which the CFTC does not regulate (CNBC). A presumption that raises the cost of listing onshore does nothing to the offshore order book.

Independent verification and substantial public scrutiny are the third of the four factors in CFTC Letter No. 26-27, and they are the factor most likely to decide which mention markets survive. Staff say words or actions “occurring in less formal or private settings or involving non-public persons are unlikely to be independently verifiable or subject to substantial public scrutiny”. They go further: a contract settling on words that “lack materiality or substantive impact in context” may escape scrutiny even at a high-profile event, and the letter’s example is “an unrelated buzzword recited during an earnings call”. The practical reading is that a contract on whether a central bank governor uses a policy term at a scheduled press conference sits at the defensible end, while a contract on whether a podcast host says a catchphrase — the letter’s own example, which a trader could induce by “purchasing an on-air acknowledgment” — sits at the other.

“While every event contract must satisfy the core principles and not be readily susceptible to manipulation, Congress recognized that certain types of event contracts, specifically those involving war, terrorism, assassination, gaming, and illegal activities, raise additional public policy considerations.”

— Michael S. Selig, Chairman, Commodity Futures Trading Commission (Remarks at Innovation Advisory Committee Conference, August 20, 2026)

That distinction explains the letter’s design. Public-interest review under Regulation 40.11 is discretionary and confined to categories Congress singled out; Core Principle 3 binds every contract. Grounding mention markets there makes the manipulation question unavoidable for every filing, whatever the Commission decides about “gaming”.

Enforcement context: two orders that read like the letter’s footnotes

Footnote 15 of Letter 26-27 lists the patterns staff want DCMs to monitor: “significant profit in the only category of contracts a participant ever trades in, trading shortly before material event-related information becomes public, and the timing of account creation or account funding”. Every item maps onto a settled case.

In In re George Anthony Devolder Santos, CFTC Docket No. 26-05, the Commission found that the former congressman opened a Kalshi account on February 11, 2026, funded it with $1,000 and then roughly $6,000 more, and traded only one market: whether he would attend the February 24, 2026 State of the Union. He built a Yes position of 30,874 contracts, posted on X about which suit to wear, and exited after the price rose from $0.15 to $0.70. He then built a No position of 23,855 contracts, did not disclose that his flight and train had both been cancelled, and profited when he posted that he was watching from an airport. The order found violations of CEA Section 6(c)(1) and Regulation 180.1(a)(1) and (3) and imposed $17,569.98 in disgorgement, a $17,500 penalty and a three-year trading ban (Santos order). That is the attendance-contract scenario the letter’s footnote 15 addresses directly, where it suggests “restrictions on trading by the individual and persons acting in concert with him or her” and “review of the individual’s public statements against position and trading data”.

In In re Gabriel Perez, CFTC Docket No. 26-06, a White House teleprompter operator opened his account on December 8, 2025, ran an account the order calls “nearly exclusive to sports and Trump mention markets”, and profited on 39 of 43 contracts across 14 markets, generating $107,539.02 (Perez order). That is the “known insider” category the letter now asks DCMs to identify in advance, drawing on “public officeholder and financial-disclosure sources for contracts on public officials”.

The earlier Kalshi cases show the self-regulatory side. The CFTC’s February 25, 2026 release describes Kalshi fining a political candidate who traded on his own candidacy $2,246.36, with a five-year suspension, and fining a YouTube channel editor $20,397.58, with a two-year suspension, after investigating “highly successful trades” (CFTC Release 9185-26). The sequence — exchange discipline in 2025, Commission orders in mid-2026, now a listing-stage standard — moves the regulator’s attention upstream, from the trader to the product.

What this means for exchanges, brokers and compliance teams

Designated contract markets. Any new mention, attendance or interaction contract filed under Regulation 40.2 now needs a written, contract-specific analysis of all four factors, and staff expect filings to “specify the prophylactic measures the DCM has implemented with sufficient detail” to be assessed. Footnote 15 is effectively the checklist: restricted lists of participants with contract affiliations, third-party screening vendors, periodic employment-status updates, “pop-up” attestations before trading, and position limits “sized so that manipulation would be economically irrational relative to its cost”. Exchanges with existing mention series should expect staff to measure them against the same standard. CNBC has reported that Kalshi pulled its sports-related mention markets in August 2026 during a CFTC internal review of the product type.

Futures commission merchants and introducing brokers. Firms that route retail flow into event contracts inherit the surveillance question at the customer level. The letter’s red flags — single-category profitability, account funding shortly before an event, trading ahead of public information — are account-level data that intermediaries see first. Know-your-customer files recording employer and public-office status now bear on which contracts a customer may trade.

Listed companies and their counsel. The letter’s reference to “exchange filings and other commercially available data for contracts on corporate officers” means earnings-call mention markets now come with an expectation that DCMs map executives and their proximate staff. Insider-trading policies that cover securities but not event contracts on the company’s own earnings call leave a gap. Staff are explicit that such obligations are not “a substitute for the DCM’s own prophylactic measures”.

Legal and compliance teams. Three documentation points follow. First, the Part 40 filing should address footnote 5 — group control — not just the named individual. Second, early engagement is invited: DCMs are “encouraged to engage with DMO staff in the early phases of designing such contracts”. Third, the letter creates no safe harbour, so a well-documented filing reduces listing risk but does not immunise the exchange from a later Core Principle 3 finding.

“We’ve addressed this guidance based on a prior discussion with the CFTC.”

— Elisabeth Diana, spokesperson, Kalshi (CNBC, September 22, 2026)

The industry reading is that the advisory codifies controls the largest onshore venue already negotiated with staff — arguably how principles-based oversight should work, since the core principles were “designed to afford DCMs the flexibility to innovate”. The sceptical reading is that a presumption set by staff advisory, without notice and comment, now shapes which products reach the market, and that only a venue with the resources for a bespoke surveillance build can rebut it.

What’s next: the forward view on Parts 38 and 40

Three tracks will determine how durable the presumption is. The first is rulemaking. The proposed amendments to Regulation 40.11 in RIN 3038-AF65, whose comment period closed on July 27, 2026, would define “gaming” and “involve” and set public-interest factors; Letter 26-27’s footnote 12 cross-references that proposal’s discussion of sporting event contracts on “discrete player actions” as “particularly susceptible to manipulation”. Chairman Selig said on August 20, 2026 that he expects the Commission “will soon propose a series of amendments to Parts 38 and 40” covering “product governance, market design, and incentive programs”. If those amendments write a manipulation standard for event contracts into Part 38, the presumption would move from staff view to regulation — or be replaced by something narrower.

The second is jurisdiction. States continue to contest federal authority over event contracts, as covered in our analysis of how event contracts split the CFTC from state gaming regulators and the New York suit testing the Third Circuit’s shield. A visible integrity standard helps the federal case that these are supervised derivatives, not wagers.

The third is market structure. Institutional liquidity is arriving, as the Cantor Fitzgerald block desk for Kalshi event contracts showed, and larger position sizes raise the stakes of the position-limit calibration footnote 15 describes. Offshore venues remain outside the perimeter, and the EU retail ban remains in place; the European Commission’s consultation on prediction contracts, which we previously reported closes on September 30, 2026, may yet add a fourth model.

FAQ

What is a mention market?

A mention market is an event contract that pays out depending on whether a specific person uses a particular word or phrase in a defined setting, such as a speech, an earnings call or a social media post. CFTC Letter No. 26-27 extends the same analysis to attendance contracts, such as whether a named person appears at an event, and interaction contracts, such as whether two people shake hands or are photographed together. The Perez order describes them as contracts where traders take a “Yes” or “No” position on whether a term will be mentioned.

Does Letter 26-27 ban mention markets?

No. The letter states that it is informational, “does not create new obligations” and does not supersede the Commodity Exchange Act or Commission regulations. It sets out a staff view that mention markets are presumptively readily susceptible to manipulation and that a DCM seeking to list them must make a “heightened showing”. In “limited circumstances”, a well-designed contract combined with trading rules, surveillance and controls may rebut the presumption. The letter also grants no no-action relief.

Which exchanges does the advisory apply to?

It is addressed to designated contract markets, the CFTC-registered exchanges that list event contracts. Footnote 4 notes that no swap execution facility currently lists event contracts, but says the analysis “is also applicable to event contracts that may be listed by SEFs”. Offshore platforms not registered with the CFTC are outside its reach; CNBC reported that Polymarket offers mention markets only on its international exchange, which the CFTC does not regulate.

What are the four factors a DCM must address?

Staff name four: whether the controlling individual is subject to independent legal, professional, contractual, fiduciary or confidentiality obligations that deter manipulation; whether the contract can be manipulated through social engineering, inducement or pressure on that individual; whether the underlying words or conduct are independently verifiable and subject to substantial public scrutiny; and whether the DCM’s trading rules, surveillance and controls are robust enough to detect manipulation and misuse of non-public information. The list is not exhaustive.

What penalties have traders faced for abusing mention and attendance markets?

In In re Santos, CFTC Docket No. 26-05 of July 31, 2026, the former congressman was ordered to pay $17,569.98 in disgorgement and a $17,500 civil monetary penalty for manipulating a State of the Union attendance contract. In In re Perez, Docket No. 26-06 of August 28, 2026, a White House teleprompter operator was ordered to pay $107,539.02 in disgorgement and a $65,000 penalty for trading on speech drafts. Both received three-year trading bans and settled without admitting the findings.

How does the CFTC approach compare with Ontario’s?

Ontario’s Standard 4.34 requires every event bet to have an outcome that can be documented, verified and “generated by a reliable and independent process”, and that “is not affected by any bet placed”. It is an eligibility rule: a non-compliant bet cannot be offered. The CFTC letter uses very similar concepts but frames them as a rebuttable presumption, so a DCM can still list a mention market if its contract design and surveillance overcome the manipulation risk.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.