CFTC Orders Kalshi to Honour Michigan Trades
United States.- 15 July 2026 www.zonadeazar.com The Commodity Futures Trading Commission (CFTC) has ordered Kalshi to honour certain trades involving Michigan residents despite a state court directive requiring the positions to be cancelled and refunded. The intervention escalates the conflict between federal prediction market oversight and state authority over sports wagering.
News Details
The dispute originated with a temporary restraining order issued on 29 June by Michigan’s Ingham County Circuit Court, prohibiting Kalshi from offering sports contracts within the state. On 6 July, the court clarified that certain positions opened by Michigan residents must be voided, cancelled and refunded.
To comply with the ruling, Kalshi submitted an emergency rule on 12 July that would have forced the liquidation of the affected positions and reimbursed customers. The exchange said it would absorb any resulting losses rather than pass them to customers or other market participants.
The CFTC stayed the proposal and directed the exchange to process the trades according to its normal practices. The Commission argued that federal law requires a uniform national derivatives market and impartial access to federally regulated trading venues.
The decision marks the first time the CFTC has used its emergency powers to intervene against a state court-driven attempt to unwind previously executed prediction market trades.
Industry Context
The dispute reflects the widening confrontation between the federal regulator and states seeking to regulate or prohibit sports event contracts offered through federally registered prediction markets.
Michigan’s prohibition on Kalshi sports contracts remains in effect, and the company has until 12 August to introduce geofencing for users located in the state. However, the federal order challenges the ability of state courts to retroactively cancel trades executed on a nationally regulated market.
Statements
CFTC Chairman Michael Selig said:
“A state cannot force a designated contract market to violate its obligations, and federal law does not permit it to discriminate against a state’s residents.”
He added:
“Cancelling trades that have already been executed is an unprecedented step that risks a cascading effect across the entire marketplace and undermines the certainty of contracting required for a functioning market.”
Robert DeNault, Head of Enforcement at Kalshi, stated:
“We are disappointed by this decision and believe it is unfair to Kalshi. We had already acted and unwound the trades, as the Michigan court order required us to do.”
He added:
“We are being placed in an impossible position while attempting to comply with state court orders that may contradict our federal regulatory obligations.”
Next Steps or Impact
The dispute could lead to further legal proceedings over whether a state court can alter transactions conducted on a federally regulated market. Its outcome may have significant implications for the relationship between the CFTC, state regulators and platforms offering sports-related event contracts.
Edited by: @_fonta
