CFTC Gives Contract Markets 30 Days to End Noncompliant Geographic Restrictions
Key Facts
The U.S. Commodity Futures Trading Commission (CFTC) issued an interpretation on November 5 of the requirements for competitive, open, fair and impartial access to designated markets, citing Regulation 38.151(b). The agency asked designated contract markets to end local geographic restrictions that violate those requirements within 30 days of the interpretation’s issuance, or explain why compliance is not possible. The guidance affects how contract trading platforms make their services available to users based on their geographic locations. It also gives markets a set deadline to review their local restrictions. CFTC Chairman Michael Selig said geographic restrictions are inconsistent with the goal of operating derivatives markets on a unified national basis and with the impartial-access requirements set out in law.
The interpretation also extends to brokers that provide access to markets: designated markets must ensure that these brokers do not impede access and comply with impartiality requirements within the same deadline. The guidance therefore covers not only restrictions imposed directly by platforms, but also access arrangements through brokers. The CFTC said markets must verify broker compliance within 30 days. CoinDesk reported that companies such as Kalshi have the option of restoring service nationwide or explaining why they cannot do so. The request puts prediction platforms in the position of reviewing the areas in which they make their contracts available.
The guidance takes on added significance amid a dispute over the boundaries of federal jurisdiction and state authority over sports-related event contracts. In September, a federal appeals court ruled that states can regulate Kalshi’s sports contracts under gambling laws, saying the company had not shown that those contracts were “swaps” subject exclusively to CFTC regulation. In the New York and Connecticut disputes, recent rulings rejected requests by Kalshi and Coinbase to block the two states from enforcing gambling laws on sports contracts while their appeals are pending. Those rulings do not mean the courts have decided that the CFTC exceeded its statutory authority; they concern the possibility of enforcing state laws in this context. Legal Sports Report said upcoming remand decisions could return enforcement lawsuits to state courts.
The CFTC says geographic restrictions may conflict with the nature of some markets, which depend on participation by users in particular areas. Guidance cited by CoinDesk said excluding geographic areas could reduce overall liquidity for contracts that attract regional interest, such as contracts tied to a local team advancing to the playoffs. Statewide or local election markets may also derive much of their trading volume or information from residents of the area concerned. These examples link the scope of market access to the availability of participants and the local knowledge needed for those contracts. The interpretation places liquidity and local knowledge among the agency’s reasons for opposing geographic restrictions.
The interpretation forms part of the agency’s broader position on regulating event contracts. On February 17, 2026, the CFTC affirmed in a brief to the Ninth Circuit Court of Appeals that it has exclusive jurisdiction over commodity derivatives markets, including event contract markets known as prediction markets. The agency says it formally recognized event contracts for the first time in 1992, when it permitted the Iowa Electronic Markets, tied to the outcomes of events such as elections and corporate earnings. In February, it said these contracts enable companies and individuals to hedge event-related risks, help investors manage their portfolios’ risk exposure and provide the public with information about the outcomes of future events. This argument puts the use of contracts for risk management and information provision at the center of the agency’s defense of its regulatory role.
The CFTC said it would consider the facts of each case individually when assessing any potential action, leaving the next steps dependent on the circumstances of each case. This comes as litigation continues over the application of gambling laws to sports contracts in the states. According to Legal Sports Report, remand decisions could return enforcement lawsuits to state courts. Meanwhile, the agency’s interpretation asks designated markets to address geographic restrictions it considers inconsistent with impartial-access requirements within 30 days. The two tracks leave platforms facing overlapping regulatory obligations as the cases continue.