CFTC Tells Prediction Markets to Stop Geofencing States

By Andrew R. Jacobs, Esq. | Founder & Managing Attorney, Jacobs Counsel LLC | Director, Sports, Entertainment & Gaming Initiatives, Seton Hall University School of Law | Super Lawyers Rising Star 2026

The short answer

On November 5, 2026, the Commodity Futures Trading Commission told federally registered exchanges that blocking users in particular states is inconsistent with the federal requirement that exchanges give impartial access to their markets. Exchanges have 30 days to drop those domestic geographic restrictions or explain to the agency why they cannot. The guidance does not change state gaming law, and it does not override court orders, so operators and licensees that remove geofences on the strength of this guidance alone could face state enforcement.

What changed

The CFTC issued an interpretation of Commission Regulation 38.151(b), which requires a designated contract market to give its members and persons with trading privileges impartial access to its markets, including access criteria that are "impartial, transparent, and applied in a non-discriminatory manner." The underlying statute requires each designated contract market to establish and enforce access requirements and to provide a competitive, open and efficient market.

According to the CFTC's release, the interpretation sets two 30-day expectations. First, an exchange must stop domestic geographic restrictions that violate the impartial access requirements or submit an explanation to the Division of Market Oversight of why compliance is not feasible. Second, an exchange should make sure that intermediaries reaching its markets, such as futures commission merchants and introducing brokers, are not impeding those requirements, or submit a similar explanation. Chairman Michael S. Selig said that "geographic access restrictions are inconsistent with those purposes and the Act's impartial access requirements." The Commission said it will consider the facts and circumstances of each case in deciding whether to act.

The guidance document explains the agency's reasoning. It says that a restriction allowing participants from one state while barring those from another excludes otherwise eligible participants based on location, and it points to liquidity, hedging and margin-call problems for traders who travel into a restricted state. The document describes itself as the Commission's final interpretive guidance and says it takes effect on publication in the Federal Register. It does not discuss state gambling law, preemption, court orders or tribal lands.

Why this collides with state law and court orders

Many of the geofences this guidance targets exist because states and courts required them. The Sixth Circuit ruled for Ohio against Kalshi in September 2026, and the Ohio Casino Control Commission has since sent cease-and-desist letters to prediction markets and brokers (news coverage). On October 20, 2026, the Commission told Ohio sports gaming and fantasy contest licensees, suppliers, integrity monitors and testing labs to stop servicing unlicensed sports event contract platforms and to confirm compliance by October 30. That notice treats futures commission merchants and introducing brokers as compliant only if they do not let Ohio customers reach sports event contracts listed on designated contract markets. In other words, Ohio's safe harbor depends on the very kind of geographic block the CFTC now says exchanges should not allow their intermediaries to impose.

Court orders point the same way. One day before the CFTC acted, a federal court in San Francisco enjoined Kalshi from offering sports contracts, including esports contracts, on the Indian lands of the plaintiff tribes in Blue Lake Rancheria v. Kalshi Inc. Compliance with that order requires location-based blocking. News coverage also reports court orders limiting Kalshi's sports contracts in Nevada, Michigan and Washington. Interpretive guidance from a federal agency does not dissolve a court injunction, and an exchange that disregards one risks contempt.

In New York, the Second Circuit on November 3 denied Kalshi's request to pause state enforcement while its appeal proceeds in KalshiEX LLC v. Williams. New Jersey's petition asking the Supreme Court to resolve the preemption question remains pending.

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Who this affects

Exchanges that currently block users by state must decide within 30 days whether to lift those blocks or file an explanation. Brokers and futures commission merchants that agreed to stop offering sports event contracts in Ohio or elsewhere now face pressure from the exchanges they route to. Licensed sportsbooks with prediction market affiliates, and the suppliers, data providers, integrity monitors and testing labs that serve Ohio licensees, are the businesses most exposed to conflicting demands from federal and state regulators. Athletes, teams and sponsors promoting prediction markets should also expect state regulators to scrutinize any expansion into their states.

What to do next

1. Do not remove a geofence based on this guidance alone. Map every restriction to its source, whether a state cease-and-desist letter, a licensing condition, a settlement or a court order.

2. If you operate an exchange, prepare the explanation to the Division of Market Oversight now, and document each restriction that a court order or state license requires.

3. If you hold or have applied for an Ohio license, review whether any affiliate or counterparty changes its Ohio access in response to the CFTC, and consider updating your October 30 compliance confirmation with the Commission.

4. Review vendor and partnership agreements for change-in-law, compliance cooperation and termination rights.

5. Watch for Federal Register publication, which may affect when the 30-day period runs, and for state and litigant challenges to the guidance.

Jacobs Counsel advises operators, licensees, vendors and sponsors on prediction market questions under New York, New Jersey and Ohio law. Readers with matters in other states, or on tribal lands, should speak with counsel admitted there.

Sources

1. CFTC Press Release No. 9323-26, "CFTC Issues Impartial Access Requirements Interpretation" (Nov. 5, 2026): https://www.cftc.gov/PressRoom/PressReleases/9323-26

2. CFTC, DCM Impartial Access Interpretive Guidance (Nov. 2026): https://www.cftc.gov/media/14841/DCMImpartialAccessInterpretiveGuidance110526/download

3. 17 C.F.R. § 38.151(b) (impartial access).

4. 7 U.S.C. § 7(d)(2) and (d)(9) (DCM core principles on access requirements and a competitive, open and efficient market).

5. Ohio Casino Control Commission, Licensee Notification, Prediction Market Compliance (Oct. 20, 2026), as posted by Sports Betting Dime: https://www.sportsbettingdime.com/app/uploads/2026/10/10-20-26-Licensee-Notification-Prediction-Market-Compliance.pdf

6. Blue Lake Rancheria v. Kalshi Inc., No. 3:25-cv-06162-JSC (N.D. Cal. Nov. 4, 2026), ECF No. 106 (order granting preliminary injunction).

7. KalshiEX LLC v. Williams, No. 26-1835 (2d Cir. Nov. 3, 2026), Dkt. 74 (order denying injunction pending appeal).

8. KalshiEX LLC v. Schuler (6th Cir. Sept. 25, 2026).

9. News coverage, used only where labeled: Legal Sports Report on the Ohio cease-and-desist letters (Oct. 5, 2026) https://www.legalsportsreport.com/280539/ohio-orders-10-prediction-markets-brokers-to-stop-sports-event-contracts/ , InGame (Nov. 5, 2026) https://www.ingame.com/cftc-unblock-geofenced-states/ , Sports Betting Dime (Nov. 5, 2026) https://www.sportsbettingdime.com/news/industry/cftc-orders-prediction-market-companies-to-cease-geofencing-states-within-30-days/ , RG.org (Nov. 6, 2026) https://rg.org/news/prediction-markets/cftc-impartial-access-interpretation-geofencing-prediction-markets

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