The Commodity Futures Trading Commission has given federally regulated exchanges 30 days to remove domestic geographic restrictions that breach its impartial-access requirements, or explain why compliance is not feasible. The interpretation, announced on 5 November, intensifies the struggle over who controls access to American prediction markets.
For operators, the difficulty is practical as well as legal. Geographic blocking has become a means of complying with court orders. A restriction imposed to satisfy one authority can now require an explanation to another.
Michigan has ordered Kalshi to use a third-party location service to keep out prohibited sports wagering. On 4 November, a federal judge also barred the company from offering sports contracts on the lands of the tribal plaintiffs in a California case.
The latest intervention makes national access a more explicit regulatory priority. Delivering it still depends on the legal disputes that determine where particular products may be offered.
What the CFTC Is Asking Exchanges to Do
The relevant firms are designated contract markets, or DCMs: exchanges operating under federal commodities law. Regulation 38.151(b) requires impartial access, including transparent criteria applied without discrimination and comparable fees for participants receiving equal services.
The new announcement also addresses intermediaries, through which customers may reach an exchange. Within 30 days, DCMs should ensure these firms comply with the access requirements, or explain why that is not feasible. The CFTC says it will assess individual circumstances when considering possible action.
That explanation route matters. It gives an exchange facing a conflicting order a way to put the problem before its federal regulator. Submitting an explanation does not, by itself, establish how the agency will resolve it.
There is also a distinction between a rule governing access and a ruling on a particular contract. The existing regulation includes provisions for suspending or denying access. The latest interpretation concerns geographic restrictions that violate the impartial-access requirements, rather than abolishing every condition on participation.
For the industry, the immediate task is to establish which restrictions arise from commercial choices, which follow negotiated agreements and which are required by courts. Their legal foundations will shape any response.
Two Histories Have Collided
The dispute brings together two routes into the American market.
The modern state sports-betting industry developed after the Supreme Court's May 2018 decision in Murphy v NCAA. The court struck down the Professional and Amateur Sports Protection Act, which had restricted states' ability to authorise sports gambling. It left states able to make their own choices, while expressly recognising that Congress could regulate sports gambling directly.
The subsequent state-by-state approach became the framework in which conventional online bookmakers sought permission to operate. Location checks help operators establish whether a customer is inside a territory where they can accept the bet.
Prediction markets approached the opportunity through the federal derivatives system. The CFTC announced KalshiEX's designation as a contract market in November 2020. That status brought obligations under commodities law and the commission's rules. Kalshi first submitted a self-certification for sports event contracts in January 2025, according to the Ninth Circuit's later account of the business.
An event contract pays according to a specified outcome. When that outcome is a sporting result, the transaction sits at the centre of the classification dispute: the exchange relies on its federal status, while gaming authorities examine the activity as wagering within their territory.
The CFTC has actively defended its position. On 27 October, it announced litigation against Utah to block state enforcement against federally registered markets, arguing that Congress had given the agency exclusive jurisdiction.
That is the commission's legal position. The court cases determine how far it prevails in particular circumstances.
Michigan Shows Why Geographic Blocking Became Compulsory
Michigan provides a concrete example of the operational conflict.
In a preliminary injunction dated 1 September, the Ingham County Circuit Court barred Kalshi from activities connected with internet sports betting in the state. The order covered offering and facilitating the contracts, accepting related payments and promoting them to people in Michigan.
It also required a third-party geolocation provider licensed by the Michigan Gaming Control Board. Location verification had become a court-directed control, with consequences for failing to implement it.
The order reflected concerns about age limits, consumer safeguards and the competitive position of businesses complying with Michigan's gaming regime. These findings supported interim relief within Michigan.
The CFTC had already intervened in an earlier stage of the Michigan dispute. On 14 July, it stayed a proposed emergency Kalshi rule change responding to a state order to cancel certain existing trades, and directed the exchange to fulfil those trades normally.
The distinction between blocking a new transaction and cancelling an existing one matters. Both affect access, but the latter also changes what happens to a contract already entered into. The July intervention shows that the disagreement had reached the mechanics of settlement months before the latest announcement.
An exchange therefore needs more than a national policy preference to resolve its position. It must address the specific obligations arising from each proceeding.
Tribal Lands Raise a Separate Federal Question
The California litigation adds another layer, because tribal gaming operates within its own federal statutory framework.
On 4 November, US District Judge Jacqueline Scott Corley granted a preliminary injunction in Blue Lake Rancheria v Kalshi. The order bars Kalshi Inc. and KalshiEX from offering sports contracts on the plaintiff tribes' Indian lands. It requires the plaintiffs to provide boundary maps by 13 November and Kalshi to report on compliance within 21 days of the order.
The geographic scope is the tribal lands identified in that case. The relief is preliminary, while the litigation continues.
The order followed a September decision by the Ninth Circuit involving Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians. The appeals court found the tribes likely to succeed on their claim under the Indian Gaming Regulatory Act, or IGRA, and returned the case for consideration of the remaining injunction requirements.
Its reasoning addressed whether sports contracts entered into from tribal territory amounted to gaming on Indian lands. It also rejected the argument that the Commodity Exchange Act displaced IGRA's separate requirements in those circumstances.
That makes the case significant beyond its physical boundaries. A dispute involving two federal statutes raises a different question from a state's attempt to enforce its own gambling rules. A national derivatives regime and a federal framework protecting tribal gaming authority must be considered together.
Treating every restriction as the same kind of obstacle would obscure what operators actually need to resolve.
National Reach Carries a Commercial Price
The commercial attraction of national access is easy to understand. An exchange benefits from bringing buyers and sellers together. Restricting the pool of eligible participants can reduce available trading interest, while changing access makes customer acquisition less predictable.
Intermediaries add another dependency. An exchange may list a contract, but the app through which a customer trades must also be willing and able to offer it. Distribution involves decisions by several businesses, each with its own obligations.
For groups already involved in conventional gambling, the calculation extends to their relationships with gaming regulators.
Nevada made that point explicitly in a November 2025 notice. Its Gaming Control Board said that offering sports event contracts in Nevada, or partnering with businesses doing so there, would be considered when assessing a Nevada licensee's continuing suitability. That was a stated regulatory position, rather than an automatic penalty applying to every prediction-market business.
An operator assessing expansion must therefore consider the income it hopes to earn alongside the permissions and partnerships supporting its existing business. A route to additional customers may create obligations elsewhere in the group.
Our earlier examination of FanDuel's Utah restrictions considered that tension from Flutter's perspective. The wider question is how reliably a company can serve the customers it has acquired while the available products remain contested.
Why Britain Is a Useful Comparison
For readers in England, the exchange mechanism is familiar. The Gambling Commission notes that betting exchanges have existed in Britain since 2000.
In February, the regulator said the current prediction-market products appeared likely to fall within the betting-intermediary category, subject to the particular business model. That is an existing gambling-licensing route. The commission also distinguishes gambling facilities from financial-services products, which fall under the Financial Conduct Authority.
The government's September parliamentary answer reinforced its position: prediction markets operating in Great Britain would require Gambling Commission licensing and, if approved, would be regulated as betting intermediaries under the Gambling Act 2005.
American federal registration therefore provides no permission to target British customers. The British licensing question has to be answered within the domestic framework.
The comparison also helps explain the American commercial incentive. Great Britain already has an established national framework for sports betting. A federal route promising broader reach has a different value where conventional sportsbook access depends on individual states.
Our View: Certainty Matters as Much as Reach
The CFTC has a coherent market argument: national exchanges work best when participation follows consistent rules. State gaming authorities and tribal plaintiffs raise another substantial issue: what happens to their protections and permissions when a familiar wagering activity is offered through a different regulatory structure?
The industry cannot resolve that disagreement through branding. Calling a product a prediction market helps describe how it operates; the relevant statutes and judicial decisions determine its legal position.
For operators, we would judge progress by the durability of access. The ability to attract a customer today has a different commercial value if the company cannot confidently establish which contracts that person will be able to trade tomorrow.
The most useful next evidence will be the responses exchanges submit, the CFTC's treatment of court-directed restrictions and subsequent decisions in the underlying cases. Those developments will show whether the competing requirements can be reconciled in practice.
A larger potential audience is an opportunity. Reliable permission to serve it is what allows a business to turn that opportunity into lasting revenue.
Editorial research and analysis by Lucky BetMastermind, with help from ChatGPT.