CFTC gives 30 days to remove geofencing in US prediction markets

The Commodity Futures Trading Commission (CFTC) ordered federally regulated prediction-market exchanges to remove geographic trading restrictions within 30 days or submit a written explanation of why they cannot comply, in an interpretation published on 5 November 2026. The directive applies to Designated Contract Markets (DCM) and follows a string of legal disputes among operators, states and tribes.

Scope of the order and legal framework

The CFTC issued the interpretation on 5 November under Commission Regulation 38.151(b), which requires DCMs to provide competitive, open, fair and impartial trading access. Chairman Michael Selig defended the national-access mandate under federal derivatives law:

"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," said Michael Selig. "Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements."

Exchanges must eliminate domestic restrictions that violate those requirements or file written explanations with the Division of Market Oversight of the CFTC within 30 days. The guidance also requires intermediaries accessing regulated exchanges to follow the same impartial-access rules.

Conflict with court orders and state laws

The legal fight centers on whether federal derivatives regulation preempts state gambling laws. Under the Commodity Exchange Act, exchanges registered with the CFTC operate under federal oversight. Nevertheless, several states argue that contracts on sporting events are gambling products subject to state licensing.

Courts have not maintained a uniform stance on whether CFTC registration bars state enforcement. In August, a unanimous Ninth Circuit rejected Kalshi’s claim that Nevada geofencing orders made federal compliance impossible; the judges called the position a "false, all-or-nothing proposition." On 4 November, the Ninth Circuit required Kalshi to block access to certain contracts on California tribal lands.

Senator Adam Schiff sharply criticized the new guidance: "the CFTC’s most egregious attempt yet to undermine state law, the Tribes, and now, the courts." The dispute also touches tribal sovereignty, because federally recognized tribes retain gaming rights under separate legal frameworks.

Impact on operators

DraftKings Holdings, which holds DCM status, expects limited impact. CEO Jason Robins downplayed the consequences on the 6 November third-quarter earnings call:

"As far as the CFTC thing, I would not make anything of that. I do not think that is going to affect anything for us. There is a process for demonstrating why you can only operate in certain geographies. We have had a really good relationship with the CFTC, and I think that will be something that we can work through with them easily," said Jason Robins.

Other platforms face a more complicated situation. Kalshi, Polymarket and Crypto.com restricted contracts on sporting events in Michigan under court directives. Nevada and Washington have also sought restrictions, and several platforms withdrew contracts from Utah after felony charges were filed against Kalshi.

Procedure and gaps in the guidance

The directive does not explain how operators must act when faced with conflicting court orders nor does it specify penalties for non-compliance. The commission said it will assess individual circumstances before considering regulatory action. The interpretation builds on prior CFTC interventions: in July the CFTC instructed Kalshi to honor trades in Michigan despite a state court order, and in August ordered Kalshi to continue operating in New York despite state limits.

The federal-state conflict now reaches across the US prediction-market industry and sets an immediate timetable: regulated exchanges have 30 days from the 5 November publication to adjust access or justify limitations to the Division of Market Oversight.