The Commodity Futures Trading Commission (CFTC) on Thursday evening, November 5, told federally regulated exchanges that they may not block customers in particular US states from trading. In an interpretation of its “impartial access” rule for designated contract markets, Regulation 38.151(b), the agency said domestic geographic restrictions are inconsistent with the Commodity Exchange Act. That covers the state-by-state geofencing that prediction markets use to keep sports contracts away from states where courts or regulators have barred them.
What the CFTC asked exchanges to do
Exchanges have 30 days either to end any state-level restrictions that break the rule or to explain to the CFTC’s Division of Market Oversight why they cannot. In the same window, they are expected to confirm that the brokers and other intermediaries that route customers to them are not blocking access either, or to file a similar explanation. InGame reported that these intermediaries include futures commission merchants and introducing brokers.
Chairman Michael Selig said derivatives markets need to work the same way across the country. “Geographic access restrictions are inconsistent with those purposes,” he said. The release names no specific penalty for exchanges that do not comply. It says the Commission will look at the facts and circumstances of each case. The interpretation itself also argues that restricted access can reduce liquidity, using sports contracts as its example: where a contract attracts disproportionately regional interest, such as whether a home team advances to its playoffs, excluding those regions could decrease the contract’s overall liquidity.
Where it collides with the states
The guidance lands in the middle of an active legal fight. InGame reports that court orders currently bar Kalshi’s sports contracts in Michigan, Nevada and Washington, and that Kalshi pulled its contracts from Utah after the state filed criminal charges. A day earlier the Ninth Circuit refused to rehear Nevada’s case, and New Jersey’s petition on the same question is waiting at the Supreme Court.
State action did not pause this week. On November 4 Arkansas Attorney General Tim Griffin sued Kalshi in state court, alleging it let residents as young as 18 bet on football, elections and reality shows without a gambling license. In California, a federal judge granted two tribes a preliminary injunction barring Kalshi’s sports contracts on their lands, after a September Ninth Circuit ruling found the contracts were likely Class III gaming there.
Sportsbook operators are caught in the middle too. InGame notes that DraftKings, FanDuel and Fanatics all geofence the sports event contracts they offer, while state gaming regulators have warned that offering those contracts could put operators’ sportsbook licenses at risk. Kalshi said it is evaluating the guidance. The CFTC’s separate proposed rules on event contracts remain open for public comment until November 18.
What it means for players
Nothing changes overnight. The 30-day window runs into early December, exchanges can ask for more time by explaining why they cannot comply, and state court orders still apply until a court says otherwise. If you see a prediction market suddenly appear in your state, it may still face enforcement there, as Ohio’s cease-and-desist orders showed.
Prediction market accounts are not covered by state gaming rules on age checks, self-exclusion and complaints in the way a licensed sportsbook account is. If you want those protections, our US sports betting legal states map shows where state-licensed mobile betting is available, and our guide to the best US betting sites covers the licensed options in each state.
Sources
- CFTC Issues Impartial Access Requirements Interpretation (Release 9323-26) (U.S. Commodity Futures Trading Commission)
- DCM Impartial Access Interpretive Guidance (U.S. Commodity Futures Trading Commission)
- Attorney General Griffin Sues Prediction Market Kalshi for Providing Illegal Gambling Platform in Arkansas (Arkansas Attorney General)
- CFTC To Prediction Markets: Unblock Geofenced States Within 30 Days (InGame)
- Kalshi Sports Contracts Banned On Two California Tribes' Lands As Judge Issues Injunction (InGame)
Written in our own words from the sources above. Spotted an error? Tell us and we will correct it and log it on our corrections page.
About the author
The BettingSeeker News Desk covers regulation, operator news and safer gambling developments in the UK, the US and Canada. Every story is based on primary sources such as regulator announcements, government publications and company filings, or on reporting by established news outlets, and every source is linked at the end of the article.
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