CFTC orders end to geofencing in prediction markets

The Commodity Futures Trading Commission on 5 November 2026 issued an interpretation saying federally regulated prediction markets exchanges generally may not deny access to traders solely by location. The guidance requires exchanges to review their access policies and relationships with intermediaries, and gives them 30 days to remove geographic restrictions that violate the requirements or explain why they cannot comply.

What the guidance requires and the legal basis

The CFTC grounds its interpretation in the Commodity Exchange Act and the impartial-access obligation in Rule 38.151(b) for designated contract markets (DCMs). The document states federal law "generally does not permit" an exchange to exclude eligible US traders solely because of their geographic location. The agency also holds exchanges responsible for ensuring intermediaries do not impose restrictions that would violate those requirements.

"Geographic restrictions undermine the national uniformity and consistency the Act is meant to deliver," said Michael Selig, chairman of the CFTC, in a message posted on X on 5 November 2026.

The CFTC set an administrative deadline: exchanges have 30 days to correct restrictions or to submit explanations to agency staff about the impossibility of compliance.

Conflict with court orders and recent cases

The guidance directly conflicts with court orders that have imposed geographic blocks in Michigan, Nevada and other states. Several courts had previously rejected the argument that such blocks violate federal law.

In August 2026, the US Court of Appeals for the Ninth Circuit ruled against Kalshi in the Nevada litigation, rejecting the exchange’s claim that blocking Nevada residents would violate impartial-access rules. The court characterised Kalshi’s position as a "false, all-or-nothing proposition" and found no evidence that complying with Nevada law would trigger action by the CFTC.

The Sixth Circuit reached a similar conclusion in September 2026 in cases concerning Ohio and Tennessee, holding that impartial-access rules do not require specific contracts to be nationally available. A federal judge in New York also rejected Kalshi’s argument in July 2026, finding the regulation does not mandate offering contracts across the whole country.

Impact in Michigan and prior CFTC action

In September 2026 a judge issued a preliminary injunction in Michigan ordering Kalshi to block access to sports contracts for state residents using Michigan‑approved geolocation technology, with potential penalties of $500,000 per day for non‑compliance. In July 2026 the CFTC intervened when Kalshi voided sports contracts to obey a state court order and directed the exchange to honour trades it had cancelled.

"We are being put in an impossible position, trying to follow state court orders that may contradict our federal regulatory obligations," said Robert DeNault, Kalshi’s head of compliance, in July 2026.

The new guidance does not overturn existing court orders. The CFTC does not directly rescind those rulings and exchanges would still need judicial relief to stop complying. That overlap leaves platforms facing the difficult choice of obeying state mandates or the agency’s hardened federal expectations.

Operational effects highlighted by the CFTC

The agency said excluding whole regions reduces liquidity, distorts prices and can prevent traders from managing existing positions, singling out sports contracts where excluding local residents may affect markets tied to regional teams. The CFTC also said exchanges must audit and review agreements with intermediaries to prevent third parties from imposing restrictions contrary to federal law.

What’s next for exchanges and pending litigation

CFTC‑regulated exchanges must decide within 30 days whether to amend their access rules or file formal justifications. Meanwhile, the courts that issued orders in states such as Michigan, Nevada, Ohio and Tennessee remain divided on the scope of federal authority over event contracts. The clash between the CFTC and judicial decisions is likely to continue through appeals and petitions for relief, although the guidance has already fixed the agency’s administrative stance on impartial access.

Related links: Rule 38.151(b) and the discussion of sports contracts appear in the regulation section and the impacts on event-sports markets are analysed in the sports section. For coverage focused on platforms and markets, see b2b.