The Commodity Futures Trading Commission (CFTC) has reportedly launched an investigation into the "mention markets" on prediction market platforms.
In the wake of this probe, Kalshi has put a halt to all mention markets in its sports betting segment, NPR reported Thursday. The decision to suspend these markets comes as the CFTC's investigation is ongoing, with no definite timeline for their potential reinstatement, the report said.
Mention markets, which have recently surged in popularity, enable bettors to place bets on the specific words used by public figures, ranging from President Donald Trump to sports commentators.
Kalshi employees have debated the value of "mention markets," with co-founder Luana Lopes Lara reportedly supporting the concept as a way to attract users beyond sports betting and diversify as its sports prediction markets face more than two dozen lawsuits from states and tribes.
Kalshi and the CFTC did not immediately respond to Benzinga's request for comments.
Trump Speech Betting Scandal Fuels Market Scrutiny
The scrutiny on mention markets comes after White House, last month, stated that a teleprompter operator was allegedly betting on Trump speeches and lost his job. This incident highlighted the potential for insider trading and market manipulation in prediction markets.
Kalshi rival Polymarket offers similar "mention markets" on its overseas platform, which is not regulated by the CFTC, but does not offer them on its U.S. platform. Most prediction markets are "self-certified," allowing platforms to launch markets after filing paperwork with federal officials stating that they comply with rules governing financial derivatives known as swaps.
Earlier this week, the CFTC ordered Kalshi to continue operating as its legal battle with New York unfolds. New York is seeking a court order to block Kalshi from offering event contracts in the state and is seeking more than $36 billion in damages. "New York has no business regulating these interstate financial markets," CFTC Chairman Michael Selig said.
