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The Commodity Futures Trading Commission has given prediction markets 30 days to remove domestic geographic restrictions that violate its impartial access requirements or explain why compliance is not feasible, according to InGame.
The federal development follows state-level action involving the same industry. PlayOhio reported on Oct. 22 that Ohio sent cease-and-desist letters to 10 prediction markets and brokers.
CFTC interprets impartial access to cover state restrictions
The CFTC issued an interpretation of its second core principle, which concerns impartial access. Previously, the agency had not interpreted that principle to require geographic access across the United States.
The interpretation covers designated contract markets, or DCMs, as well as intermediaries such as futures commission merchants and introducing brokers that provide customers access to other exchanges. DCMs unable to comply must submit an explanation to the CFTC’s Division of Market Oversight.
“Geographic access restrictions are inconsistent with those purposes and the Act’s impartial access requirements,” CFTC Chairman Michael Selig said, referring to the Commodity Exchange Act.
Court orders and sportsbook licenses complicate access
According to InGame, court orders have banned Kalshi’s sports contracts in Michigan, Nevada and Washington. Kalshi also withdrew those contracts from Utah after the state brought criminal charges.
DraftKings, FanDuel and Fanatics restrict access to sports event contracts in some states because state gaming commissions have threatened to revoke sportsbook licenses for operators offering those contracts.
The CFTC said restricted access can reduce liquidity and undermine an exchange’s effectiveness as a marketplace for trading and risk management. Its interpretation singled out sports contracts that attract regional interest: Excluding a home team’s region, for example, could decrease a contract’s overall liquidity.
If you or someone you know has a gambling problem, call the Ohio Problem Gambling Helpline at 1-800-589-9966.
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Source: As reported by InGame.
