The U.S. Commodity Futures Trading Commission (CFTC) on Tuesday moved to stop Kalshi from cancelling trades placed by residents of Michigan after a state judge last month ordered the prediction market operator to cease offering sports wagering to people in the state.
The CFTC said it was staying an emergency application from Kalshi that sought to comply with the Michigan court's directive, on the grounds that the state order interfered with federal law. According to the CFTC, federal rules allow trading in most sports-related event contracts when offered on a registered contract market.
CFTC Chair Michael Selig emphasized the agency's position in a statement, saying a state cannot require a registered contract market "to violate its obligations." Selig added: "The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations."
The agency's action represents a direct confrontation between federal regulators, who have been broadly supportive of the emerging prediction market sector, and a group of nearly two dozen states and Native American tribes that have acted to block new entrants from offering sports betting within their jurisdictions.
Kalshi confirmed it was reviewing the CFTC order and weighing its next moves. The company's representative did not provide additional detail on potential filings or operational changes. Representatives for the Michigan Attorney General's office did not immediately respond to a request for comment.
The underlying state action followed an enforcement move by Michigan's attorney general, who had accused Kalshi of breaching state gaming laws. Last month, a Michigan judge issued an order barring Kalshi from permitting state residents to place bets on sports events, prompting the company's emergency application to the CFTC.
Context for markets and operators
The CFTC's intervention leaves Kalshi in a regulatory standoff: the company faces a state court order to stop offering sports wagering to Michigan residents while the federal regulator asserts that registered contract markets are governed by federal law that generally permits trading in most sports-related event contracts. How that standoff resolves could affect other prediction market operators facing similar state-level prohibitions.