CFTC tells exchanges to stop geofencing US traders in new Nov 5 guidance

The US Commodity Futures Trading Commission issued interpretive guidance on 5 November 2026 saying federally regulated prediction market exchanges generally may not bar access based solely on a trader's location. The agency told exchanges they have 30 days to remove geographic restrictions that violate the Commodity Exchange Act or to explain to CFTC staff why they cannot comply.

What the CFTC directed

The guidance interprets the Commodity Exchange Act (CEA) and Regulation 38.151(b) to require designated contract markets (DCMs) to provide fair, nondiscriminatory access to eligible participants, and says that excluding otherwise eligible US traders solely because of where they live is generally inconsistent with those requirements. The CFTC also instructed exchanges to review their access policies and intermediary arrangements for compliance.

CFTC Chairman Michael Selig reinforced the position on X on 5 November 2026:

"Geographic restrictions undermine the national uniformity and consistency that the Act is intended to facilitate." — Mike Selig (@ChairmanSelig)

The agency argued that excluding entire regions reduces liquidity, distorts prices and can prevent traders from managing existing positions. It explicitly highlighted sports contracts, saying excluding residents of a region could undermine markets involving local teams. The guidance further states exchanges are responsible for ensuring intermediaries do not impose geographic restrictions that violate federal impartial access requirements.

Conflict with court orders and recent litigation

The interpretation thrusts exchanges into direct conflict with court-ordered geographic restrictions already in place in several jurisdictions. Courts in multiple matters have rejected the argument that state-imposed geographic bans necessarily violate federal impartial access rules.

• The Ninth Circuit rejected Kalshi's impartial access argument in August 2026 in a Nevada dispute, calling Kalshi's position a "false, all-or-nothing proposition" and finding no evidence the CFTC would enforce against compliance with Nevada's gambling laws.

• The Sixth Circuit reached a similar conclusion in September 2026 in cases involving Ohio and Tennessee, holding that impartial access rules did not require particular contracts to be available nationwide.

• A federal judge in New York rejected the same argument in July 2026, finding Regulation 38.151(b) did not compel exchanges to offer contracts nationally.

The guidance does not itself overturn injunctions or other court orders. Exchanges subject to binding judicial relief would still need to seek relief before disregarding those orders.

Specific injunctions and CFTC interventions

A September 2026 preliminary injunction in Michigan ordered Kalshi to block residents from accessing sports event contracts using state-approved geolocation technology and exposed the exchange to potential penalties of $500,000 per day for violations. In July 2026 the CFTC intervened after Kalshi unwound Michigan sports contracts to comply with a prior state court order, directing the exchange to honour trades it had cancelled.

Kalshi has repeatedly argued that following state restrictions would force it to violate federal impartial access requirements. Kalshi's head of enforcement, Robert DeNault, said in July 2026 that the company was being put in an "impossible position, looking to follow state court orders that may contradict our federal regulatory obligations." The new guidance addresses the geographic exclusions themselves rather than only the downstream issue of cancelled trades.

What exchanges now face

Exchanges licensed and regulated by the CFTC must reassess access controls and intermediary agreements promptly. The agency's 30-day window requires either policy changes to remove geographic exclusions that run afoul of the CEA or written explanations to CFTC staff for why an exchange cannot comply. At the same time, where courts have issued injunctions requiring exclusions, exchanges will confront the practical and legal dilemma of conflicting orders.

The CFTC's guidance tightens the agency's public position on impartial access and signals potential enforcement and supervisory scrutiny of access rules and intermediary practices, while leaving unresolved how exchanges should act when a federal regulator's interpretation collides with state court injunctions. For markets built around local sports outcomes and other regionally sensitive contracts, the tension between national uniformity and state court orders is now explicit.