CFTC Gives Exchanges 30 Days to Drop State-Level Access Restrictions
The CFTC told US-registered futures exchanges on November 5 to stop applying domestic geographic access restrictions that violate its impartial-access requirements within 30 days, or explain why they can’t comply. The CFTC's new interpretation covers every designated contract market (DCM), but the timing makes it most relevant to Kalshi, Polymarket US, and other platforms that have spent the year fighting state regulators over sports event contracts.
The immediate impact may be smaller than the headline suggests. An interpretation is the CFTC’s statement of how it reads its own rule. It isn’t a court ruling, and it doesn’t undo any state order. What it does give exchanges is a formal federal position to cite while the fight over who controls access to these markets plays out.
The CFTC wants federally regulated prediction markets to be accessible across the US. But some states have restricted sports prediction markets, creating a conflict between federal and state authorities.
Some states have taken legal action to stop prediction-market platforms from offering certain sports contracts to residents.
The federal regulator says exchanges must provide fair access and cannot impose geographic restrictions that violate its rules.
Exchanges must remove restrictions that violate the rules or explain why they cannot comply, including potential conflicts with court orders.
The announcement doesn't cancel state restrictions or court orders. Legal battles will continue, and access may remain limited.
Some states have taken legal action to stop prediction-market platforms from offering certain sports contracts to residents.
The federal regulator says exchanges must provide fair access and cannot impose geographic restrictions that violate its rules.
Exchanges must remove restrictions that violate the rules or explain why they cannot comply, including potential conflicts with court orders.
The announcement doesn't cancel state restrictions or court orders. Legal battles will continue, and access may remain limited.
The interpretation concerns Regulation 38.151(b), which requires DCMs to provide competitive, open, fair, and impartial access. The CFTC’s reading is that domestic geographic restrictions can conflict with that requirement. An exchange that maintains restrictions in violation of the rule must either remove them or file an explanation with the Division of Market Oversight showing why compliance isn’t feasible. Exchanges are also expected to make sure their intermediaries aren’t restricting access improperly, under the same comply-or-explain process.
Chairman Michael S. Selig has argued that derivatives markets have to operate nationally. That position isn’t new. In a February amicus brief filed in the Ninth Circuit, the CFTC argued that state restrictions on federally regulated event contracts interfere with its exclusive jurisdiction. What has changed is the format. A litigation argument is now accompanied by formal agency guidance with a deadline attached.
Michigan is the clearest example of where this collides with state enforcement. On October 28, the Michigan Gaming Control Board announced that Polymarket US had agreed to stop offering new sports event contracts to Michigan customers and to close any remaining open positions by the end of the day on November 25. That agreement took the form of a court-approved stipulation, and the state has also secured agreements or court orders covering Kalshi, Robinhood, and Coinbase.
The CFTC's interpretation creates a difficult situation for exchanges that have restricted access in response to state enforcement. Removing those restrictions could conflict with existing court orders or agreements, and that's where the comply-or-explain structure matters. An exchange under a court order could cite that restriction in its filing, although the CFTC hasn't said whether it would accept that explanation.
None of this resolves the underlying question of whether federal derivatives law preempts state gambling laws. States maintain they can enforce gambling and consumer-protection rules, while the exchanges and the CFTC argue that qualifying event contracts fall under federal jurisdiction. Courts will decide that, not an interpretation, so customers shouldn’t expect availability to change in Michigan or anywhere else on the strength of this announcement alone.
The November 5 release doesn't specify when the 30 days start. If the clock runs from the announcement, the deadline lands around December 5. Exchanges under court orders may have limited room to change their access policies by then, so the more telling detail is what their explanations say and how the CFTC responds.
If the agency accepts explanations citing court orders and state agreements, exchanges may have more time to resolve those conflicts. A tougher response would put additional pressure on operators already caught between federal requirements and state enforcement. Either way, the filings should offer a clearer picture of how the CFTC intends to enforce its interpretation.
Editor's notes
“There are a few things worth noting here. First, the CFTC wants one national market, not 50 different ones. Second, it wants to protect its authority over federally regulated exchanges. And third, prediction markets work better when more people can participate.”
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