When a federal judge in Utah had to decide whether a prediction market could obey state gambling law and federal commodities law at once, the document that settled the point was an appendix the exchange had already published with its own contracts. In his memorandum decision of 4 August 2026 in KalshiEX LLC v. Cox, No. 2:26-cv-00151, District Judge Robert J. Shelby wrote that each of the exchange's event contracts carries an appendix of trading prohibitions, that some of those prohibitions already single out particular groups of people, and that adding one more category of prohibited participants to a sports contract "does not appear to be onerous." The impossibility defence lost on a list.
The restricted participant list is the least described compliance asset in this category, and it is now what a court uses to measure what a venue can do. Capability is not neutral in a courtroom: what a venue has shown it can build becomes the floor for what it can be asked to build next.
One footnote carried the impossibility argument
The reasoning sits in footnote 142, which points at five pages of the exchange's own summary judgment materials, and the categories it quotes differ from page to page. One names current and former players, coaches and staff of a league together with employees, beneficial owners, officials and training personnel. Another adds household members and immediate family. A third names caddies and tournament sponsors. The fifth, from a motorsport contract, reaches stewards, race directors, timing and scoring personnel, riders, co-drivers, team principals, employees of any official tyre or fuel supplier, and route safety officers.
Taken together, those references describe a venue that has already done the sport by sport work of deciding who sits close enough to an outcome to be barred from trading it. The court did not need to find that the venue could geofence a state. It found that the venue had built a machine for carving groups out of its own order book, and that one more carve was a small ask. How three courts read the silence in the Commodity Exchange Act differently is covered in our piece on the express preemption clause.
What the appendix says, and who sets its edges
The appendices are public, so this is checkable. In its Regulation 40.2(a) self-certification of 13 February 2026 for a golf playoff contract, KalshiEX LLC attaches an Appendix B headed Trading Prohibitions. It says the prohibitions come in addition to the general bar on trading on material non-public information, that people under 18 cannot open accounts, and that four groups may not trade: current and former players, caddies, coaches and staff of the governing tour; paid employees of the tour and of tour participants; sponsors, organisers and tour executives with material decision making authority; and the household members and immediate family of all of them.
Two features matter more than the categories. The first is a discretion clause: for college tours, or elsewhere "where otherwise appropriate (as identified by the Exchange)", the restriction narrows to the specific teams taking part rather than the whole association. The venue sets the perimeter contract by contract, and the document does not say by what test.
The second is a footnote on the same page recording that the contract had not been endorsed by any league or association as of self-certification. The appendix therefore undertakes to keep out current and former staff of a governing body with which the filing declines to claim any relationship. Nothing about that is unlawful. It is a promise about a population the venue has no documented way to enumerate.
The list is public because the analysis is not
There is a reason a court reached for this artifact. In the same filing, Appendix A carries the contract terms and Appendix B the prohibitions, while Appendices C, D and E, on further considerations, the source agency and compliance with the core principles, are confidential. The pattern is identical at the other designated contract market. In its self-certification of 1 June 2026 for athletic draft pick contracts, QCX LLC, trading as Polymarket US, files the terms as Attachment A and segregates the explanation and analysis as Attachment B, seeking confidential treatment under Commission Regulation 145.9.
That is the mechanism. The reasoning about why a product satisfies the core principles is withheld; the list of excluded people is not. When a judge looks for evidence of what a venue can do, the exclusion list is one of the few operational documents left on the table. Directive 02 of our manifest asks that settlement sources and conflicts be stated in plain language on the surface where the trade happens. Publishing the perimeter while sealing the analysis meets the letter of that and inverts its purpose.
Two venues built the same control in two different shapes
Compare the rulebooks and the category's problem becomes visible. The KalshiEX rulebook filed as version 1.18 defines a Source Agency Prohibition as "the list of Source Agencies which may implicate trading prohibitions", and its prohibited transactions rule bars an insider with access to material non-public information, bars any employee or affiliate of a source agency, and separately bars anyone with influence over the outcome, at any scale.
The Polymarket US rulebook builds the same control as a standard rather than a register. Its Source Prohibition means the restrictions applicable to any person with access to material non-public information from a designated source, or positioned to influence the expiration value, "as further specified in the applicable Product Specifications". There is no published register of entities, because the obligation is a conduct test and the detail is delegated downward. As of 12 October 2026 the exchange's regulatory page publishes the rulebook, a risk disclosure statement and two participant agreements, and no product specifications.
Neither shape is wrong, but they fail in opposite directions. A list can be shown to a court and is out of date the moment the world moves; a standard is always current and can never be audited from outside. A category that wants a floor has to choose.
At both venues the pointer lands on the wrong rule
A trader who follows the citation trail does not arrive. Kalshi publishes a standing document, Kalshi Trading Prohibitions, which opens by saying that under Kalshi Rule 5.13(s) a person may not take part in a contract if they are an employee of the source agency, hold material non-public information about it, or can influence its outcome. In rulebook version 1.18 as filed, Rule 5.13 is about viewing the market and executed orders; prohibited transactions and activities is numbered 5.17 in the body and 5.15 in the table of contents of the same document.
The other venue has the mirror image. The Polymarket US definition of Source Prohibition points to Rule 2.9, which governs scheduled and ad hoc maintenance windows. The restriction on persons holding material non-public information is Rule 2.10 in the table of contents, the body of that rule refers to itself as Rule 2.8, and on its face it reaches the exchange's own personnel and board committees rather than outside traders. Both are drafting slips rather than scandals, and either could be fixed in an afternoon. They matter because this is the one control whose operation depends on an ordinary person reading a document and recognising themselves in it.
A file generated overnight is holding up the whole control
That prohibitions document is the operational layer under the rule, and it is generated rather than drafted. The copy examined for this article carries creation metadata of 11 October 2026 at 23:07 UTC and names wkhtmltopdf as its producer, so it is rebuilt from live data, and it maps source agencies to contract tickers across 4,294 distinct ticker symbols.
Three things in that file are worth naming precisely. First, 26 of its source agency entries are unresolved template placeholders, among them <team>, <company>, <person>, <polling organization> and <league> official transaction wire, covering 40 contract listings between them. For those, the sentence about not trading if you work for the source agency names nobody a reader could check themselves against.
Second, the alphabetical run of agencies is preceded by a block of 112 contract tickers under the heading San Francisco Unified School District, among them perpetual contracts on listed companies, wind speed, El Nino strength and World Cup markets. The same district appears again in its alphabetical position with exactly one contract beside it. Either those 112 contracts have no source agency recorded and the file carried over the preceding heading, or the mapping is wrong. From outside it cannot be told.
Third, the rulebook definition is permissive: the list identifies agencies which may implicate trading prohibitions. A file rebuilt nightly, carrying placeholders in production and calling its own effect conditional, is a thin foundation for a duty that disqualifies people from trading. Our piece on the election settlement source nobody lists found the same from the other end.
Writing the list takes one business day and changing it takes ten
The court's word was onerous, and the answer depends on when you ask. A new contract with a new appendix lists fast: under Commission Regulation 40.2(a) the exchange self-certifies and the Commission must have the submission, including the contract rules, by the open of business on the business day before listing. One business day, and the list exists.
Changing the perimeter of something already trading runs on a different clock. Under Commission Regulation 40.6(a) a rule amendment must reach the Commission ten business days before implementation, with a concurrent posting on the venue's own website. The carve outs in Regulation 40.6(d) that allow weekly notice instead cover non-substantive revisions, delivery standards, index composition, strike mechanics, fees and survey lists. Adding a class of people who may no longer hold a position is none of those, and the emergency route is narrow.
So the court was right at the moment of listing and understated the problem for the life of the contract. Directive 01 of our manifest holds that resolution rules are published before a market opens and are not revised while money is at risk. A restricted participant list is not a resolution rule, but it decides who may hold the position being resolved.
The regulator's draft counts the same list in the venue's favour
This artifact is about to carry more weight. In the proposal Prediction Markets; Public Interest Determinations, published by the Commodity Futures Trading Commission on 12 June 2026 at 91 FR 35806, the positive public interest factors proposed at 91 FR 35860 include, as factor five, whether the venue has formal information sharing arrangements with the relevant league, governing body or integrity monitor, and, as factor six, whether it maintains "appropriate surveillance and trading prohibitions" and coordination with governing bodies. The inside information factor in the same text turns on whether a duty of confidentiality "cannot be adequately addressed through surveillance and trading prohibitions of the registered entity." Nothing there says what either must contain.
Put the documents side by side and the gap is plain. The regulator proposes to credit a venue for trading prohibitions and league coordination; the golf filing offers the prohibitions and disclaims the endorsement. The proposal does not define what makes a trading prohibition appropriate, so the word will be filled in by whatever venues happen to have filed. A standard set in advance beats one reverse engineered from a court record.
The rule that measures capability asks for arrangements
The exclusion list is not where the Act puts this obligation. Commission Regulation 38.153 requires a designated contract market to have arrangements and resources for effective enforcement of its rules, including authority to collect documents and to examine the books and records of its members and of persons under investigation. Regulation 38.156 requires an automated trade surveillance system that processes each day's orders and trades within 24 hours and can reconstruct the sequence of market activity. Regulation 38.151 requires participants to consent to the venue's jurisdiction before they get access.
Those are capability requirements in the proper sense: powers, systems and consent. A list of forbidden categories is an output of such a system, not a substitute for one. A venue that can name a caddie's employer but cannot match an order to a person has a document, not a control. Our piece on player availability contracts follows the same problem into a sport's medical rooms.
Enforcement runs through the same gap. Under Rule 3.3(a) of the KalshiEX rulebook, customers reaching the exchange through a futures commission merchant must be made aware of and acknowledge the rulebook and the Source Agency Prohibition, and the merchant must ensure and document that. Acknowledgement is the control, so the venue learns that a third party collected a confirmation, not whether the person behind the order is a caddie. The Commission's enforcement order over mention markets landed on someone whose role was real and whose name was on nobody's restricted list.
What a venue should be able to show about its own list
None of this argues for fewer prohibitions. It argues that the list has graduated from paperwork to evidence. A venue that takes it seriously should be able to say, on any given day, who owns the list and approves changes to it; from what source each excluded category is enumerated, and what it does when no roster exists; what happens to the open positions of people an amendment newly excludes; whether anything beyond acknowledgement verifies a trader arriving through an intermediary; and whether the published version contains unresolved placeholders at the moment a reader opens it.
Those are operational questions, not legal ones, and all of them could be answered publicly. That is the asymmetry worth fixing: the sealed appendix explains the reasoning, the public one makes the promise.
The list outlives the argument it was written for
Kalshi appealed the Utah judgment, and the appeal is docketed in the Tenth Circuit as No. 26-4100; Robert Linnehan reported for Sports Betting Dime on 8 September 2026 that the court declined to enjoin enforcement while the appeal proceeds. The preemption question may yet be answered in the venue's favour, and the finding about the appendix will not be unwound by that, because it was never a ruling about federal law. It was an observation about what the exchange had shown it could do, and observations of that kind do not get vacated.
Directive 05 of our manifest says standards are set against the jurisdiction that regulates next, not only the one that has not yet. The restricted participant list is the clearest live example. It was written as a product disclosure, it is read as a capability statement, and the Commission's June 2026 proposal would make it a scoring factor. A venue that still treats it as an appendix will keep being surprised by what other people find in it.