In case after case since February 2026, Kalshi has defended itself against state gambling enforcement by reaching for the same four words. The duty to provide impartial access sits in Commission Regulation 38.151(b), it runs to roughly ninety words, and its briefs in Ohio, Tennessee, Nevada, Arizona, Utah and Washington have offered it as the reason a designated contract market cannot honour a state line. If federal law makes you open your market to everyone, the argument runs, then a state telling you to close it to its own residents is demanding the impossible.
As of 13 October 2026, six benches have examined that argument. Two accepted it and four refused it, and the four refusals do not share a single rationale: two of them went to the rule's drafting history, one answered on the structure of the sentence, and one never reached the question of what the rule means at all. That spread matters more than the win column does, because a venue building its position on a regulation it has not read closely is exposed in a way it cannot see.
The rule names three groups and two tests
Regulation 38.151 has three paragraphs and the disputed one is short enough to quote whole. Paragraph (b) requires that a designated contract market "provide its members, persons with trading privileges, and independent software vendors with impartial access to its markets and services", and then states what that includes: "(1) Access criteria that are impartial, transparent, and applied in a non-discriminatory manner; and (2) Comparable fee structures for members, persons with trading privileges and independent software vendors receiving equal access to, or services from, the designated contract market."
Look at the two items the rule itself puts forward as the content of the duty. One concerns criteria. The other concerns fees. Neither mentions territory, residence or where a trader happens to be sitting. The paragraphs on either side point the same way: paragraph (a) requires an applicant to consent to the venue's jurisdiction before being let in, and paragraph (c) requires published, impartially enforced rules for denying, suspending or revoking the access of someone who already has it. All three paragraphs are about the relationship between a venue and the firms and people who trade on it.
The Commission said it was worried about net worth
The reason to read the duty narrowly is not an inference. The Commodity Futures Trading Commission said what the requirement was for when it proposed it, in Core Principles and Other Requirements for Designated Contract Markets, published at 75 FR 80572 on 22 December 2010. On page 80579 the preamble states that "the purpose of the proposed impartial access requirements is to prevent DCMs from using discriminatory access requirements as a competitive tool against certain participants", and that "access to a DCM should be based on the financial and operational soundness of a participant, rather than discriminatory or other improper motives."
Footnote 51 on the same page supplies the worked example, and it is a balance sheet rather than a border. The Commission wrote that the impartial access requirement obliges venues "to avoid the creation of exclusive membership standards that focus on high net worth", and that any participant should be able to show financial soundness either by being a clearing member of a clearing organisation that clears the venue's products or by having clearing arrangements with such a member. The harm the rule was drafted against is a small firm priced or screened out of a market to protect the incumbents in it.
The preamble is equally specific about what the rule permits. A venue may run different categories of participant, "but may not discriminate within a particular category", and fees may differ between categories where the difference is reasonably related to the cost of serving them. That is a structural fairness rule with a stated mechanism, not a guarantee that every product reaches every doorstep.
One phrase changed between the proposal and the final rule
The final rule, published at 77 FR 36612 on 19 June 2012, narrowed the class the duty protects. On page 36625 the Commission recorded that commenters had found the term "market participant" uncertain, and said it was "replacing the term 'market participant' in proposed section 38.151(b) with the phrase 'persons with trading privileges'." The phrase in force today is the product of a deliberate move toward a defined group. Anyone citing the rule for a proposition about the general public is citing a sentence that was edited to be narrower than that.
The same discussion contains a sentence that should give any venue pause before it builds a defence here. "Though the CEA does not specify that DCMs provide 'impartial' access", the Commission wrote, "a reasonable reading of the CEA is that it permits rules that would promote impartial access." The statutory hook, Core Principle 2 at 7 U.S.C. section 7(d)(2), requires a venue to establish, monitor and enforce compliance with its own rules "including: (1) Access requirements". The word impartial is the Commission's, added by regulation in 2012. An argument that depends on an agency's own gloss depends on something that agency can revise.
Six benches, and the four refusals do not match
Two district courts read the duty geographically. The Utah court recorded both in a footnote: in Johnson, decided in the District of Arizona on 5 May 2026, enforcing Arizona law was treated as making impartial access impossible because the operator would have to "exclude Arizona residents from trading event contracts on its platform"; in Orgel, decided in the Middle District of Tennessee on 19 February 2026, Tennessee law was read as requiring "a Tennessee-only exchange".
The fullest answer came from the District of Utah. In KalshiEX LLC v. Cox, No. 2:26-cv-00151, decided by Judge Robert J. Shelby on 4 August 2026, the court went to the preamble and the structure of the rule. Kalshi had argued that the financial passages were "stray reference[s]" because the rule does not mention geography. The court disagreed: "it is not 'stray references' that place the impartial access mandate in the financial context. It is the only context discussed." Its summary of the point takes one line and is worth keeping: the requirement "is a rule for fair play, not one concerning who is allowed on what playground."
Eight days later, a state court reached the same result by a shorter route. In the amended preliminary injunction order in State of Washington v. KalshiEX LLC, No. 26-2-10264-3 SEA, signed by Judge John McHale of the King County Superior Court on 12 August 2026, the court quoted the regulation in full and then disposed of the argument in one sentence: "an anticipated inability to match Washington traders with other traders nationwide is not discrimination in providing access on the part of Kalshi." The Washington Attorney General's Office described the order's scope in its own announcement the same week.
The Ninth Circuit declined the argument without interpreting the rule at all. In KalshiEX, LLC v. Assad, No. 25-7516, decided on 28 August 2026, the panel called the submission "a false, all-or-nothing proposition" and held that Kalshi "does not explain why not offering sports events contracts in Nevada would run afoul of section 38.151(b)". It leaned on the district court's finding, in Hendrick at 817 F. Supp. 3d 1034 to 1035, that there was no evidence the Commission would move against a registrant for complying with state law. That is a ruling about an unmet burden, not about what the rule means, and it is worth separating from Utah's reasoning rather than counting the two as one. The same passage also quotes the regulation as requiring criteria "applied in a discriminatory manner", dropping the "non", which is a small reminder of how loosely these ninety words get handled.
The appellate reading arrived a month later. In KalshiEX LLC v. Schuler and the consolidated KalshiEX LLC v. Orgel, Nos. 26-3196 and 26-5235, decided on 25 September 2026 in an opinion by Judge Julia Smith Gibbons, the Sixth Circuit held that the impartial access regulations "do not appear to require a designated contract market like Kalshi to offer any 'particular market' for the event contracts it lists", and that they instead require impartial access "to whatever 'market(s)' the entity offers". Pointing to the fee subsection and applying the whole-text canon from United States v. Gillispie, 929 F.3d 788, 790, the panel concluded that "this regulation is about economic rather than geographical impartiality." Like the Utah court, it went to the 2010 preamble and footnote 51 for support. It also relied on the Special Rule at 7 U.S.C. section 7a-2(c)(5)(C), which contemplates contracts that are lawful in some states and not in others.
That decision did something else worth noting. Its closing paragraph affirms the Southern District of Ohio's refusal of an injunction and vacates "the Middle District of Tennessee's grant of Kalshi's motion", remanding for further proceedings. One of the two decisions reading this rule geographically was therefore set aside by the circuit above it, in the same ruling that rejected the reading. The tally as of 13 October 2026 is not four to two: it is four live refusals, the Arizona decision of 5 May 2026, and one vacated Tennessee order.
The appellate answer came with a worked example
The Sixth Circuit did not stop at textual analysis. In footnote 15 it recorded that "other companies have also complied with both the federal impartial-access requirement and state sports-gaming laws by using geofencing to create a market for participants in one State and then giving impartial access to those individuals", naming Sporttrade as the example and attributing it to Judge Roth's dissent in the Third Circuit's Flaherty decision at 172 F.4th 239 n.53. The Ninth Circuit made the same move, noting that regulated entities in Nevada use geofencing. Kalshi's reply, that geofencing is technically challenging, time-consuming and expensive, drew the sentence the panel borrowed from its own motions ruling: "expensive does not mean impossible."
This is the part a venue should sit with. An impossibility argument is falsified the moment a competitor does the thing. Once a federal court of appeals has named the firm that complied with both obligations at once, the argument stops being a legal position and becomes a statement about one venue's engineering priorities. How well that engineering actually performs is a separate question, and we have looked at what a geolocation diligence affidavit would have to show a judge. The point here is narrower: the rule invoked to excuse not doing it does not point that way.
Where the definitional fight actually moved
None of this is where the category's legal risk sits. The live question is whether these contracts are swaps at all, which is the ground the circuits split on and the subject the Commission addressed with two instruments on 9 October 2026. We have traced that split and the proposals answering it separately. Regulation 38.151(b) is a side argument, and the reason to get it right is not that it will decide a case. It is that the way a venue argues about its own access rules tells a regulator and a court how that venue thinks about access.
Utah's judgment is on appeal to the Tenth Circuit. Robert Linnehan, writing for CDC Gaming on 8 September 2026, reported that the court denied Kalshi's emergency motion for an injunction pending appeal, leaving Utah free to enforce while the appeal proceeds. The order itself is not posted on govinfo, so that step rests on news reporting rather than on a document we can read.
The page this rule has always asked you to publish
Here is the sentence from the 2010 preamble that nobody quotes in litigation. A venue, the Commission wrote on page 80579, can satisfy the requirement that participation criteria are impartial, transparent and non-discriminatory "by establishing clear and impartial guidelines and procedures for granting access to its facilities and publishing such guidelines and procedures on its Web site."
Read against the fights of 2026, that is remarkable. The compliance method the Commission described for this rule is a published document. The duty that has been cited as a shield against state law is, in the agency's own account of it, mostly a transparency obligation. Our second directive asks that "fees, spreads, settlement sources, custody arrangements and conflicts of interest are stated in plain language on the surface where the trade happens." For access the regulator asked for the same thing sixteen years ago, and the category has largely treated the rule as an argument instead of an instruction.
What a venue can put on a page without waiting for anyone:
- The access criteria themselves, dated, stating what disqualifies an applicant and what does not, in the form paragraph (b)(1) describes.
- The categories of participant the venue runs, what each one receives, what each one pays, and a statement that nobody inside a category is treated differently from anyone else in it.
- The reason behind any fee difference between categories, tied to cost or to a service received, which is the test the 2012 final rule set out.
- Eligibility kept separate from availability: who may hold an account at all, distinct from which markets are offered in which places and on whose instruction.
- The rules for denial, suspension and revocation that paragraph (c) requires, with the date each criterion last changed.
Our fifth directive says that "standards are set against the jurisdiction that regulates next, not only the one that has not yet." The access rule is a quiet test of that idea. A venue with the page above does not need the impartial access argument, because it can show a court exactly who it lets in and on what terms. A venue that needs the argument has effectively told the court the opposite: that its criteria live in a brief rather than on its own site. Four benches in 2026 declined to read ninety words of fee-structure regulation as a shield against state law. The more useful reading is the one the Commission offered in 2010, which is that those ninety words were a request to write your access rules down and publish them.