CFTC chair's geofencing order puts Fanatics and FanDuel in contempt risk

Michael Selig did not issue a suggestion. His order to designated contract markets to end geographic access restrictions within thirty days is a compliance directive from a federal regulator, and it names Fanatics, FanDuel, and DraftKings by implication — companies that hold state gaming licenses they cannot afford to lose and are now being told by the CFTC that retaining those licenses is insufficient justification for restricting access to federally regulated contracts.

The legal position for those three companies is worse than it appears. They did not geofence because they agreed with the states. They geofenced because they had no choice — Ohio and Massachusetts made explicit that companies offering sports-event contracts inside their borders would lose their gaming licenses. That calculation made sense before Selig's order existed. It makes considerably less sense now that a federal regulator has told them non-compliance with impartial access requirements is itself a regulatory violation. They are not caught between a rock and a hard place. They are caught between two regulators with enforcement authority, and one of them is about to start counting down thirty days.

Kalshi is in a different position, though not a better one. The CFTC has already issued emergency orders telling Kalshi to continue operating in jurisdictions where state courts had ordered otherwise. The Northern District of California's preliminary injunction blocking Kalshi from tribal lands arrived after the CFTC's geofencing guidance, which means Kalshi is now operating under a federal instruction to remove geographic restrictions at the same moment a federal judge has ordered geographic restriction. The CFTC and the judiciary are not aligned, and Kalshi is the body absorbing that misalignment directly.

The reporting frames this as a federal preemption contest. I think that framing understates the structural problem. Preemption is a question about which law controls. What Selig has created is a question about which institution controls — because a federal agency ordering regulated entities to disregard the orders of federal courts is not a preemption argument. It is a separation of powers problem, and it is one that Congress has not addressed and the Supreme Court has not been asked to resolve in this specific configuration.

Senator Schiff's characterization of Selig as "captured by the industry" is politically legible but legally irrelevant. What matters is whether the Commodity Exchange Act's impartial access requirements actually preempt state gambling law — a question courts in Nevada, Washington, Michigan, and California have answered provisionally in the states' favor, and a question the CFTC chair has answered definitively in the other direction without the authority to do so conclusively.

The thirty-day clock Selig has set benefits Kalshi in the short term. It pressures Fanatics, FanDuel, and DraftKings in a way that redistributes the political and legal burden across the industry rather than concentrating it on one company. That is not an accident. An industry under collective pressure is harder for eight state attorneys general to pick off one complaint at a time.