Securities Regulation Daily Wrap Up, FEDERAL PREEMPTION—CFTC tells prediction markets not to restrict geographic access, escalating conflict with states, (Nov 6, 2026)
The CFTC announcement arises from location-based restrictions related to ongoing litigation involving state oversight of prediction markets.
Amid increasing state moves to limit prediction markets trading, the CFTC has instructed designated contract markets (DCMs) to cease any geographic restrictions that violate impartial access requirements within 30 days, or else explain to the Division of Market Oversight why compliance is not feasible. DCMs must similarly ensure that intermediaries accessing their markets are not impeding access, or explain why this is not feasible (DCM Impartial Access Requirements, November 5, 2026).
Issued in a November 5 press release, the 30-day instruction arises from interpretive guidance issued the same day stating that geographic access restrictions are inconsistent with the Commodity Exchange Act (CEA) and Commission rules and regulations. The guidance is effective upon publication.
The CFTC said it was aware that some DCMs are restricting access based on trader location.
“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,” Chairman Michael Selig stated in the press release. “Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements.”
However, the CFTC guidance may put the Kalshi exchange at odds with court orders in Washington, Michigan, and Nevada requiring it to implement geofencing measures to restrict access by residents.
30-day comply or explain. The press release states:
“DCMs must cease domestic geographic restrictions that violate the Impartial Access Requirements within 30 days, or else submit to the Division of Market Oversight (“Division”) an explanation for why such compliance is not feasible. Further, within 30 days, DCMs should ensure that intermediaries accessing their markets are not impeding and are complying with the DCM’s Impartial Access Requirements, or else submit to the Division an explanation for why such compliance is not feasible. The Commission will consider the facts and circumstances of any particular case in connection with potential Commission action.”
Impartial access. Under Commission Regulation 38.151(b), DCMs must provide competitive, open, fair, and impartial access to their members and persons with trading privileges.
The CFTC said it issued the interpretive guidance to inform the public of the Commission's views on impartial access requirements that should be guiding exchanges’ access criteria.
Specifically, the CFTC said the Commodity Exchange Act (CEA) and Commission regulations generally do not permit a DCM to limit access based on the location of an otherwise eligible market participant within the United States.
“Such selective restrictions undermine the principle of impartial access, as they do not uniformly apply to all similarly situated (in terms of financial or operational soundness) eligible market participants and arbitrarily differentiate between such market participants based solely on their location,” the CFTC stated.
The CFTC said that limiting access by geographic location raises “significant concerns” for both financial integrity and risk management within derivatives markets. For example, a market participant who establishes a position in an allowed location and travels to a restricted location would be unable to manage their position or meet margin calls. In turn, this could lead to forced liquidation, which may affect the market as a whole.
Location-based restrictions may also concentrate trading activity among small pools and fragment national liquidity, particularly for election markets, the CFTC said.
Geofencing orders. Several courts have ordered the Kalshi exchange to implement geofencing that restricts access by residents of certain states.
The Nevada Gaming Control Board announced in July that Kalshi agreed to implement a geofencing solution in order to comply with a May 18 injunction by a Nevada state court. However, the parties have subsequently clashed over execution;
A Washington state court on August 12 ordered Kalshi to implement geofencing based on residency and location sought by the Washington Attorney General;
A Michigan state court on September 1 ordered Kalshi to use a licensed geolocation services provider to prevent access to its trading platform in the state as requested by the Michigan Attorney General;
A California federal district court on November 4 ordered Kalshi to provide a status report within 21 days on compliance with an injunction barring access on plaintiffs’ tribal lands, and instructed the tribes to provide maps indicating geographic boundaries.
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