The federal derivatives regulator overseeing Kalshi said Michigan acted improperly by pressuring the company to reverse already completed trades. On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC) intervened, issuing an order that bars Kalshi from complying with a local court directive to cancel past customer transactions.
The action intensifies the agency’s broader legal clash with state governments, as the CFTC insists it holds exclusive authority over trading on Kalshi, which is registered under its jurisdiction as a designated contract market.
CFTC Chairman Mike Selig stated that the commission will not allow states or courts to force regulated entities into violating federal law or agency rules. A proponent of prediction markets, Selig has advocated for more supportive regulations while firmly defending the CFTC’s control over the space, even when it conflicts with state actions.
The agency has already filed lawsuits against several states attempting to block or penalize event-based trading platforms by classifying them as gambling. It also noted that Michigan is the first state to directly target completed transactions.
Selig warned that undoing executed trades would be unprecedented and could trigger broader instability, undermining the trust and certainty that markets depend on.
In June, a Michigan circuit court ordered Kalshi to stop offering online sports-related contracts in the state, following a request from the attorney general.
On July 2, Kalshi submitted an emergency filing to the CFTC seeking guidance on how to respond to a court order requiring certain Michigan users’ trades to be voided, canceled, and refunded. The CFTC instructed the firm not to proceed, warning that such reversals could damage market confidence by making traders fear that completed transactions might later be undone.
