- CFTC blocked Kalshi from canceling Michigan trades despite a state court order.
- Federal regulators say the Commodity Exchange Act overrides conflicting state actions.
- Michigan dispute may shape future oversight of U.S. prediction market platforms.
The U.S. Commodity Futures Trading Commission (CFTC) has directed prediction market platform Kalshi to continue honoring trades involving Michigan residents despite a state court order requiring the company to cancel them.
The decision intensifies an ongoing legal dispute over whether federal regulators or state authorities have jurisdiction over prediction market platforms.
CFTC Defends Federal Oversight of Kalshi
According to a July 14 order, the CFTC directed Kalshi to continue honoring Michigan trades after a state court ordered the platform to stop offering sports-related event contracts and void completed transactions following legal action by Michigan Attorney General Dana Nessel.
Kalshi sought emergency guidance from the CFTC on July 2 after receiving the court order. The company asked whether it should comply with the state’s demand to cancel previously executed contracts.
The regulator responded by instructing Kalshi not to unwind those trades. According to the CFTC, federal law governing designated contract markets takes precedence over conflicting state actions.
JUST IN: CFTC blocks Kalshi from canceling Michigan trades despite a state court order
Chairman Michael Selig says the agency "will not allow states or state courts to bully registered entities into violating federal law," per Reuters.
The clash is the latest in a battle… pic.twitter.com/TQpC19QAQo
— Coin Bureau (@coinbureau) July 14, 2026
CFTC Chairman Michael Selig said a state cannot require a federally regulated exchange to violate its obligations under the Commodity Exchange Act. He added that canceling completed trades would be an unprecedented measure that could weaken confidence in regulated financial markets.
Selig also stated that the commission would not allow states or state courts to force registered entities into violating federal regulations. He argued that certainty in completed transactions remains essential for maintaining orderly and reliable markets.
Kalshi, which operates as a CFTC-registered designated contract market, said it is reviewing the regulator’s order and evaluating its next steps.
Federal and State Authorities Continue Jurisdiction Battle
The Michigan case represents the latest chapter in a broader dispute between federal regulators and several states over prediction markets.
Michigan authorities argue that Kalshi’s sports-related event contracts violate state gambling laws because the platform allegedly operates without a state gaming license. A Michigan judge granted a restraining order last month preventing the company from offering those contracts to residents.
The CFTC, however, maintains that Congress granted the agency exclusive authority to regulate designated contract markets. The regulator also emphasized that federal law does not allow such platforms to discriminate against residents based on their state.
Michigan became the first state to seek the cancellation of completed trades on a federally regulated prediction market. The CFTC warned that allowing states to reverse settled contracts could create broader uncertainty across financial markets.
The commission has also filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin over similar jurisdictional disputes. The outcome of these legal battles could shape the future regulation of prediction markets across the United States.
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