The Commodity Futures Trading Commission (CFTC) sent a formal demand on November 5 requiring designated contract markets (DCMs) to eliminate domestic geographic restrictions that impede eligible U.S. participants from accessing Kalshi’s prediction‑market contracts, or to provide a detailed explanation of why compliance is not feasible. The agency gave exchanges a 30‑day window to act, intensifying a regulatory clash that began with a Sixth Circuit decision on the platform’s use of geofencing.

Kalshi, a U.S.‑based prediction market, has faced a series of court rulings over whether its sports‑event contracts qualify as swaps under the Commodity Exchange Act. In September, the Sixth Circuit held that Kalshi had not demonstrated its contracts met the statutory definition of a swap and, even if they did, the Act did not pre‑empt state gambling laws in Ohio and Tennessee. The court allowed the use of geographic limits, noting that other exchanges employ similar controls and that impartial‑access rules do not require every contract to be offered in every state.

CFTC’s new stance on impartial access

The CFTC’s latest guidance argues that excluding eligible traders based on location fragments liquidity and harms price discovery, especially in markets such as elections where broader participation can improve informational efficiency. According to the commission’s release, exchanges must review their access criteria, rulebooks and intermediary arrangements, and submit a compliance status report within the 30‑day deadline. The agency also signaled that it will evaluate each case’s facts before deciding on enforcement actions.

Implications for Kalshi and other platforms

Kalshi’s own documentation already lists restrictions for users in Michigan, Nevada and Washington, reflecting a patchwork of state‑level limits. A recent federal order in California enjoined Kalshi from offering sports contracts on tribal lands, further complicating the geographic landscape. The CFTC’s demand does not automatically overturn the Sixth Circuit’s decision on swap classification, but it does pressure exchanges to broaden access where possible. The agency’s proposal, published on October 19, seeks to expand the swap definition to explicitly cover sports, political, cultural and weather events, with comments due November 18.

What to watch next

Stakeholders should monitor how major DCMs respond to the CFTC’s 30‑day demand, including any explanations filed for continued geoblocking. Kalshi’s pending response to New Jersey’s Supreme Court petition, due December 7, may provide further insight into the federal‑state regulatory tug‑of‑war. Additionally, the CFTC’s broader rulemaking on event‑type swaps could reshape the classification and oversight of prediction markets across the United States.