CFTC orders prediction markets to end state geofencing in 30 days

The CFTC on November 5 issued an interpretation holding that the state-level geographic restrictions known as geofencing violate the impartial access requirements of the Commodity Exchange Act, and it gave the exchanges those rules cover 30 days to end the blocks or explain why they cannot. The action, published as CFTC press release 9323-26, swings in the opposite direction from recent state court rulings that forced Kalshi and other venues to stop selling sports event contracts in states such as Michigan and Nevada.

The agency grounded the interpretation in Regulation 38.151(b), which requires designated contract markets, or DCMs, to provide persons with trading privileges competitive, open, fair and impartial access. Chairman Michael S. Selig framed the decision around the law's national design. "Derivatives markets must operate on a uniform basis at a national scale in order to achieve the purposes set out in the Commodity Exchange Act," he said in the release. "Geographic access restrictions are inconsistent with those purposes and the Act's impartial access requirements."

Related reading: Kalshi AI Market Odds Reach 85%, but Filing and Live Rules Differ.

The instruction runs on two clocks, both 30 days. The first gives DCMs until about early December to cease domestic geographic access restrictions that violate the impartial access requirements, or to submit to the agency's Division of Market Oversight an explanation of why compliance is not feasible. The second tells the same exchanges to make sure that intermediaries accessing their markets, named in the guidance as FanDuel and Fanatics among others, are not impeding impartial access, again with an explain why not alternative. The CFTC said it would weigh the facts and circumstances in reviewing intermediaries.

The timing is pointed. State courts in Michigan, Nevada and Washington had ordered Kalshi to stop selling sports event contracts in those states, and several of those judges rejected the exchange's argument that the orders collided with federal law. Other DCMs geofenced more voluntarily, closing access where litigation was pending or where a loss of state licensure was a live risk; DraftKings, FanDuel and Fanatics, for example, do not offer sports event contracts in some states. The new interpretation reads as a direct answer to those state moves.

Related reading: NFL’s Supreme Court Filing Tests Prediction Market Rules.

Under the CFTC reading, a DCM cannot on its own geofence off whole states on the basis of pending litigation or a state court decision, because access must be uniform at a national scale. That is the sharpest point of the document and the one most likely to collide with the state courts. At the same summit circuit where Kalshi's head of litigation Jovy Dedaj recounted that the venue had "complied with the state order and we had the CFTC come after us", the gap between the two regimes was already public.

For the venues the practical effect is a return of access. Kalshi, Polymarket and the other CFTC-regulated DCMs would regain the right to serve the blocked states, which is an upside for participation, volume and liquidity in event markets tied to federal contracts. The second-order effect is fresh tension: the ruling invites conflict with judges already skeptical of federal preemption claims, and any state pushback would land squarely on exchanges caught between a federal directive on one side and a state bench on the other.

Related reading: CFTC prediction markets rule: event contracts would count as swaps, casino wagers excluded from definition.

What to watch is now mechanical rather than speculative: the two 30 day clocks. Whether each DCM comes into compliance, files the required explanation, or stakes out a middle position will set the tone for months, and the explanations the Division of Market Oversight receives will be the first public record of how the industry thinks it can comply. State responses matter as much as the federal directive, because an exchange that lifts a state block at federal instruction could still face contempt findings or fresh orders from the same court that imposed the original one. This is a structural ruling about who may trade event contracts, not a statement about the odds any market has priced; the settled 2026 midterm markets and the 2028 presidential odds are separate stories from this access rule.

Related reading: Illinois Sports-Contract Rules Blocked on Swaps Finding.

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