CFTC Mandate: US Prediction Markets Must Eliminate State-Based Geo-Restrictions

The US Commodity Futures Trading Commission (CFTC) has issued a significant directive aimed at harmonizing the nation's financial and prediction markets. Through a formal interpretation of impartial access requirements for designated contract markets (DCMs), the commission stated that domestic geographic restrictions are generally inconsistent with federal market access rules. Operators of platforms that allow trading on the outcomes of political events or economic data now face a race against time. They have been given a thirty-day window to either remove state-based access blocks or provide a detailed justification to the Division of Market Oversight explaining why compliance is unfeasible.

This decision impacts the industry during a period of explosive growth. Platforms such as Kalshi, Polymarket, and Crypto.com have historically implemented regional access blocks in states like Michigan to navigate ongoing legal disputes at the state level, where such markets are often scrutinized as unauthorized gambling. However, the CFTC views these restrictions as a breach of the Commodity Exchange Act, which mandates that exchanges provide competitive, open, and impartial access to all eligible participants, regardless of their location within the United States.

Numbers and facts

The scope of this directive is evident in the specific entities involved and the tight compliance timeline. The CFTC has granted a strictly defined 30-day period. Within this timeframe, exchanges must deactivate their geoblocking systems or submit evidence showing why immediate compliance is not possible. A prominent example of the friction caused by these blocks is Michigan, where Kalshi faced regional bans despite federal support. The federal watchdog had previously utilized emergency powers to instruct Kalshi to honor customer trades in Michigan and New York, even when faced with contradictory state court orders.

Chairman Michael S. Selig emphasized that derivatives markets must operate uniformly on a national scale under the Commodity Exchange Act. In a supplemental rule issued on October 9, 2026, the commission further clarified that traditional gambling products, such as sportsbook wagers and casino games offered by state-licensed operators or federally recognized tribes, are excluded from the federal definition of a swap, provided they do not occur on organized exchanges where multiple parties negotiate trades.

"Derivatives markets must operate uniformly on a national scale under the Commodity Exchange Act. Geographic restrictions undermine statutory objectives and impartial access mandates." - Michael S. Selig, Chairman of the CFTC

Background

The conflict between federal and state oversight has simmered for months. While prediction markets facilitate trading on event outcomes, many US states view this as betting and thus gambling. DraftKings CEO Jason Robins downplayed the impact of the CFTC guidance during the company's third-quarter earnings call. He noted that the company maintains a strong relationship with the federal regulator and expects most state-level regulators to wait for definitive judicial guidance before pursuing aggressive enforcement actions against platforms operating under federal mandates.

Why it matters for German players

For players in Germany, this US-specific decision has no direct impact on daily access to online casinos but highlights the importance of clear regulatory frameworks. In Germany, the Interstate Treaty on Gambling 2021 (GlüStV 2021) is the governing law. German players should ensure they only play at sites listed on the official GGL whitelist. These platforms guarantee adherence to strict player protection measures, such as the cross-provider monthly deposit limit of 1,000 Euros, monitored through the LUGAS system. Furthermore, virtual slots in Germany carry a strict 1 Euro per spin limit and a mandatory cooling-off period after one hour of play.

The US conflict illustrates the challenges that arise when different levels of government clash over jurisdiction. While federal law is asserting dominance over prediction markets in the US, the GGL provides relative clarity in Germany. Playing at MGA or Curacao-licensed sites places players in a legal gray area without the protections of German law. The GGL actively pursues illegal offers to ensure fair competition for licensed entities.

What it means for GGL-licensed casinos

For GGL-licensed German casinos, the development in the US serves as a lesson in the limits of regional regulation. While German operators are strictly bound by national rules, US operators are fighting for a unified market. GGL casinos do not need to worry about geoblocking within Germany as long as they comply with the nationwide requirements of the GlüStV 2021. Technical integration with LUGAS and compliance with strict advertising rules remain the primary challenges here, whereas US platforms must now prepare to open their entire technical infrastructure to all 50 states.