CFTC Orders Kalshi Not to Comply With Michigan Court’s Trade-Cancellation Order
Summary
- The US CFTC said it instructed prediction-market platform Kalshi not to comply with a Michigan state court order requiring trades to be canceled.
- The CFTC said canceling trades that have already been executed could trigger broader market disruption, undermine contractual certainty and erode market confidence.
- The CFTC said it has already sued several states seeking to regulate prediction-market businesses as illegal gambling, and that Michigan is the first state to demand trade cancellations.
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The US Commodity Futures Trading Commission has ordered prediction-market platform Kalshi not to comply with a Michigan state court order requiring it to cancel trades.
CoinDesk reported on July 14 that the CFTC issued the directive the same day, barring Kalshi from complying with the Michigan court’s demand to unwind trades. The agency maintains that, as the federal regulator overseeing Kalshi as a designated contract market, it has exclusive authority to block intervention by state authorities.
CFTC Commissioner Caroline D. Pham said in a statement that the agency would not allow state governments or courts to pressure registered entities into violating the Commodity Exchange Act and CFTC rules. Canceling trades that have already been executed would be unprecedented and could set off broader market disruption while undermining contractual certainty, she added.
The dispute dates back to June. At the request of Michigan’s attorney general, a county circuit court ordered Kalshi to halt its online sports-betting service. After the court issued an additional order on July 2 directing Kalshi to cancel and refund trades by Michigan users, the company sought emergency relief from the CFTC.
The CFTC said allowing trade cancellations could erode market confidence by creating fears that trades executed today could be invalidated a week or even a year later. It instructed Kalshi to stop complying with the court order. The agency also said it has already sued several states seeking to regulate prediction markets as illegal gambling, and that Michigan is the first state to directly demand that trades be reversed.
