CFTC Tells Platforms to Stop Geofencing States — Directly Colliding With State Court Orders
The CFTC issued an interpretation on November 5 of its 'impartial access' core principle, telling regulated exchanges including Kalshi and Polymarket to drop state-by-state geographic blocks within 30 days or explain why they cannot. The demand collides head-on with existing state court orders that require the platforms to geofence: Washington ordered Kalshi to geofence in August, and Michigan ordered it to use licensed geolocation to block the state in September, with a $500,000 daily fine for violations. Chairman Michael Selig framed the interpretation as a uniformity requirement. The platforms are now caught between a federal demand to unblock states and state court orders to block them.
The CFTC issued an interpretation on November 5, 2026 of the 'impartial access' core principle that governs the exchanges it regulates, declaring that the principle requires designated contract markets to offer access on a uniform national basis and therefore prohibits them from blocking users by state. The agency told regulated exchanges, including Kalshi and Polymarket, to drop their state-by-state geographic blocks within 30 days or explain why they cannot. Chairman Michael Selig framed the interpretation as a matter of market uniformity: 'Derivatives markets must operate on a uniform basis at a national scale in order to achieve the purposes set out in the Commodity Exchange Act.' Before this interpretation, the CFTC had not read the impartial-access principle to concern geographic access across the United States; the November 5 interpretation is a new application of an existing rule, timed to reinforce the agency's position that federal law requires the platforms to operate nationwide.
The demand collides directly with state court orders that require the opposite. Several state courts have ordered Kalshi to geofence specifically to keep its contracts out of their states. A Washington state court ordered Kalshi to implement residency- and location-based geofencing in August; a Michigan state court ordered Kalshi in September to use a licensed geolocation services provider to block access within the state, with violations carrying a $500,000 daily fine. Nevada and other states have issued comparable orders. The CFTC's interpretation now tells the platforms to do exactly what these courts have prohibited: to stop geofencing and resume serving the blocked states. A platform cannot simultaneously comply with a state court order requiring it to geofence and a federal demand requiring it not to. The interpretation creates a direct conflict between federal and state mandates, with the platforms caught in the middle and facing penalties from one authority or the other no matter which they obey.
The legal difficulty for the CFTC's position is that courts have already rejected the specific argument the interpretation rests on. When Kalshi previously argued that geoblocking a state would breach the CFTC's impartial-access rule, several courts disagreed — including the Ninth Circuit in the Nevada case and a Michigan judge who specifically rejected the contention that the impartial-access principle conflicts with state-by-state blocking. The CFTC's November 5 interpretation essentially codifies, at the agency level, an argument that federal courts have already considered and declined to accept. Whether an agency interpretation issued after courts have rejected the underlying argument carries weight is doubtful, particularly in the post-Chevron environment where courts decide statutory meaning for themselves. The interpretation may be better understood as the CFTC asserting its position as forcefully as it can while the Supreme Court cert petitions are pending, rather than as a legally decisive resolution of the conflict.
The practical effect is to sharpen the federal-versus-state confrontation to its most acute point yet. The CFTC has already sued at least nine or ten states to block their enforcement; now it is affirmatively directing the platforms to defy the state court orders that those states obtained. If the platforms comply with the CFTC and unblock the states, they expose themselves to contempt proceedings and daily fines under the state court orders — Michigan's $500,000 per day being the starkest example. If they comply with the state courts and keep geofencing, they are in violation of a federal regulatory directive from the agency that is their primary regulator and their chief legal defender. The platforms have not said how they will respond, and the 30-day window may produce either compliance, a request for more time, or a new round of litigation over which authority controls. The interpretation does not mention court orders, state regulators, or tribes, leaving the hardest questions about the conflict unaddressed. What is clear is that the dispute has moved beyond competing legal arguments into directly conflicting mandatory orders, and that resolution now depends more than ever on the Supreme Court deciding whether federal commodities regulation preempts state gambling law — the question it is expected to take up, if at all, no earlier than December.
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