CFTC Gives Prediction Markets 30 Days to Lift Geofencing or Explain Non-Compliance
CFTC guidance requires prediction markets to remove geofencing within 30 days under Regulation 38.151(b) for impartial access, per Chairman Selig. This clashes with court orders in Michigan, Nevada, Washington and California, drawing sharp criticism from Sen. Schiff. DraftKings expects limited operational effect via existing compliance processes.
SCCG Take — Operators face an immediate federal-state regulatory clash with a narrow explanation pathway available. The CFTC’s stance favors national uniformity but leaves compliance risks unresolved for affected platforms.
The Commodity Futures Trading Commission has directed registered prediction market exchanges to remove domestic geographic restrictions that violate federal impartial access rules.
In interpretative guidance issued on November 5, designated contract markets must provide competitive, open, fair and impartial access under Commission Regulation 38.151(b). Platforms have 30 days to eliminate such restrictions or submit a written explanation to the Division of Market Oversight detailing why compliance is not feasible. The rules also apply to intermediaries accessing those markets.
“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,” CFTC Chairman Michael Selig said. “Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements.”
This creates direct conflict with state court orders requiring geofencing in Michigan, Nevada, Washington and California, including a unanimous Ninth Circuit ruling against Kalshi and recent orders affecting tribal lands.
Stakeholder Reactions and Prior Interventions
Senator Adam Schiff called the guidance “the CFTC’s most egregious attempt yet to undermine state law, the Tribes, and now, the courts.” He stated that despite ongoing litigation and court orders, the CFTC and its chairman “appear to be encouraging platforms to continue offering gambling products in contempt of these court orders.”
DraftKings CEO Jason Robins addressed the matter on the company’s third-quarter earnings call. “As far as the CFTC thing, I would not make anything of that. I do not think that is going to affect anything for us,” Robins told analysts. He cited an existing process for demonstrating geographic limits and a strong relationship with the agency.
The action follows two earlier CFTC emergency interventions involving Kalshi in Michigan and New York that drew criticism for overriding state directives.
The Federal-State Compliance Conflict
The guidance offers no specific mechanism for resolving clashes with court orders and does not outline penalties for noncompliance, though it promises case-by-case review based on submitted explanations.
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