The federal derivatives regulator that oversees Kalshi said Michigan overreached by pressuring the firm to undo completed trades. On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC) stepped in, issuing an order that prevents Kalshi from complying with a local court’s demand to cancel prior customer transactions.
The move deepens the CFTC’s ongoing legal dispute with state authorities, as it asserts exclusive jurisdiction over trading on Kalshi, which is registered as a designated contract market under its supervision.
CFTC Chairman Mike Selig said the agency will not allow states or courts to force regulated entities into breaching federal law or CFTC rules. Selig, who supports the development of prediction markets, has pushed for a more favorable regulatory approach while firmly defending the commission’s authority over the sector, even when it conflicts with state action.
The CFTC has already taken legal action against multiple states seeking to restrict or penalize event-based trading platforms as illegal gambling operations. It emphasized that Michigan is the first state to directly interfere with already executed transactions.
Selig warned that reversing completed trades would be unprecedented and could create ripple effects across the market, undermining the certainty and trust essential for proper market functioning.
In June, a Michigan circuit court ordered Kalshi to halt online sports-related contracts in the state, following a request from the attorney general.
On July 2, Kalshi filed an emergency request with the CFTC for guidance on responding to a court order requiring certain Michigan users’ trades to be voided, canceled, and refunded. The commission directed the company not to comply, warning that allowing such reversals could erode market confidence by raising concerns that completed trades might later be undone.
