CFTC orders prediction markets to unblock states within 30 days
New federal guidance tells registered exchanges including Kalshi and Polymarket to lift state-level geofencing, even where courts in Michigan, Nevada and Washington have ordered it.
The Commodity Futures Trading Commission has told registered prediction market exchanges to remove geographic blocks on their products within 30 days, a move that again sets federal rules against state court orders.
The commission issued the interpretative guidance on 5 November, according to SBC Americas, stating that its "impartial access" requirements for designated contract markets (DCMs) mean operators cannot restrict residents of particular states from trading their contracts. Exchanges that cannot comply must explain in writing why not.
CFTC Chairman Michael Selig said "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," adding that "Geographic access restrictions are inconsistent with those purposes and the Act's impartial access requirements." On X, he described the guidance as ensuring exchanges give "competitive, open, fair, and impartial access to their members pursuant to CFTC regulations."
Courts in Michigan, Nevada and Washington have separately ordered geofencing of prediction market products. In August, a unanimous three-judge panel of the US Court of Appeals for the Ninth Circuit rejected Kalshi's claim that it could not satisfy both Nevada's geofencing order and federal access rules, calling the argument "a false, all-or-nothing proposition." The day before the CFTC's new guidance, the same court ordered Kalshi to geofence contracts in California so they are not available on tribal lands.
Kalshi, Polymarket and Crypto.com have all taken sports event contracts offline in states such as Michigan under court direction, SBC Americas reported.
This is not the CFTC's first intervention pitting its registrants against the courts. In July, the agency used emergency powers to tell Kalshi to honour Michigan trades a court had ordered it to void. Kalshi's Head of Enforcement, Robert DeNault, said at the time the CFTC's position left the company in "an impossible position." Former special counsels to the agency later called the move "extraordinary" during a congressional hearing.
In August, the CFTC issued a further emergency declaration directing Kalshi to keep operating in New York despite a state order to stop, which an attorney described as "blatant contemptuous disregard" for the rule of law, per SBC Americas.
The new guidance does not specify penalties for non-compliance or advise operators on how to reconcile conflicting court orders. It does allow registrants to submit a written explanation to the Division of Market Oversight, which the commission said it will assess case by case.
The issue extends beyond pure prediction market firms. DraftKings, which also holds DCM status, does not offer sports event contracts in states where it holds sports betting licences, and several operators recently withdrew contracts from Utah amid felony charges brought against Kalshi in that state.
DraftKings chief executive Jason Robins played down the risk on the company's Q3 earnings call on Friday. "As far as the CFTC thing, I would not make anything of that," he told analysts, adding that there is an established process for demonstrating why a firm can only operate in certain geographies and that DraftKings has "a really good relationship with the CFTC."
SBC Americas said it had contacted Kalshi and Polymarket for comment but had not received a response by the time of publication.