CFTC Gives Prediction Markets 30 Days to End State Limits

The Commodity Futures Trading Commission (CFTC) has given prediction market platforms 30 days to remove state-based user access restrictions or explain to the agency why they cannot restore service.

The directive applies to designated contract markets (DCMs), including Kalshi and Polymarket. Kalshi has restricted trading in Nevada, Washington and Michigan. A federal court in California also barred Kalshi from offering sports event contracts on tribal lands involved in litigation.

What does this change for prediction market operators?

Operators must either reverse their state-based limits or explain to the CFTC why they cannot restore service. The roughly one-month window turns customer-access controls into an immediate compliance decision for venues that already segment participation by geography.

The deadline applies to platforms already using state-based restrictions, rather than to every market from the date of the interpretation. It sets one timetable for removing those controls or documenting an inability to restore service.

The CFTC's legal interpretation requires those platforms to stop limiting user access by state. Chairman Michael Selig said: "geographic restrictions conflict with fair-access requirements under the Commodity Exchange Act." He also said such restrictions "may weaken liquidity," identifying fragmented participation as a market-structure concern.

The interpretation reaches the access layer rather than the approval of individual event contracts. For engineering and compliance teams, that makes location-based access controls the immediate review area, not the merits of a particular sports contract.

For traders, any restored access would widen the set of available jurisdictions, but that benefit would remain conditional. State gambling laws and court orders continue to constrain particular contracts and locations even as the CFTC presses for state-neutral access.

Broader access would address the fragmentation Selig linked to weaker liquidity, making the market-structure argument more concrete for venues that have segmented their customer bases.

That leaves a practical separation between venue access and regulatory authority. Reaching a platform is one issue; whether a particular sports event contract can be offered in a particular jurisdiction is another. The 30-day directive addresses the first without resolving the second.

Courts and states preserve competing claims

Several states continue to argue that sports event contracts fall under state gambling laws. Their position places them against the CFTC's interpretation, preserving the federal-state dispute over who regulates the contracts.

The California court order adds a separate constraint. As described, it concerns sports event contracts on tribal lands involved in litigation, rather than a statewide prohibition on all sports contracts. Compliance teams therefore have to distinguish between a platform's statewide access policy and any court-specific restriction on the product.

That distinction keeps two issues separate in the current dispute. The CFTC instruction addresses platform access; the court order addresses a specific sports-contract offering in a defined geographic setting.

Neither resolves the wider regulatory contest. Kalshi's existing limits in Nevada, Washington and Michigan demonstrate that at least one DCM has already used geographic controls, while the new rule sets a uniform response timetable.

For a platform operator, the timetable creates two paths: restore service or submit an explanation to the CFTC. For market participants, it creates uncertainty over whether access will become broader, remain segmented or change differently across the three states Kalshi has restricted and the tribal lands covered by the California litigation.

The next concrete checkpoint is the 30-day response deadline, when platforms must restore service or explain why they cannot, leaving the contest between federal access rules, state gambling laws and court orders unresolved.