Who gets to block your Kalshi bets? Washington just escalated the fight
The Commodity Futures Trading Commission has given US derivatives exchanges 30 days to remove domestic geographic restrictions that violate its impartial-access rules or explain why compliance is not feasible.
The conflict centers on geofencing: using a trader's location to determine which markets they can access. The CFTC now says otherwise eligible US participants generally should not be excluded by geography. In September, the Sixth Circuit reasoned that exchanges could use geographic limits while meeting federal obligations.
The instruction applies to designated contract markets, or DCMs. The same release says they should ensure intermediaries accessing their markets comply within 30 days, or explain why compliance is not feasible.
The CFTC's interpretation expects exchanges to examine access criteria, exchange rules and intermediary arrangements. The Commission says it will consider each case's facts and circumstances before potential action.
Legal Conflict
In its September 25 preliminary-injunction opinion, the Sixth Circuit held that Kalshi had not shown its sports-event contracts met the relevant statutory definition of a swap. The panel then reached an alternative holding: even assuming the contracts were swaps, the Commodity Exchange Act did not expressly or impliedly preempt Ohio and Tennessee gambling laws.
Rejecting Kalshi's argument that compliance with both regimes was impossible, the judges read impartial access as access to whatever markets an exchange offers. They did not read it as requiring every event contract to be available in every state.
The new CFTC position directly challenges that regulatory premise. But changing the interpretation of an access rule does not, by itself, undo the court's swap-classification decision or the rest of its preemption analysis.
Market Implications
The CFTC argues that excluding eligible traders can fragment liquidity and weaken price discovery. Its guidance highlights election markets where local participants may contribute useful information, presenting these as potential costs of geographic exclusion.
Crypto wallet Phantom's availability table lists Kalshi prediction markets in the US except Michigan, Nevada and Washington. Its October 28 integration announcement says restrictions vary by market category, and that Kalshi approves and holds trading accounts and executes trades submitted through the wallet.
Next Steps
A separate CFTC proposal published October 19 would expressly include sports, political, cultural and weather event contracts in the swap definition. Comments are due November 18.
Court obligations can be narrower than a state boundary. A November 4 federal order in California enjoined Kalshi Inc. and KalshiEX from offering sports contracts on the plaintiff Tribes' Indian lands.
Separately, Kalshi's response to New Jersey's Supreme Court petition is due December 7. The immediate operational test is the exchanges' response to the 30-day demand: which barriers they remove and which they explain to the Division of Market Oversight.
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