The CFTC ordered Kalshi to continue operating in Michigan even though the platform had already unbundled trading on sporting events in compliance with a state court order, deepening a dispute over who regulates prediction markets in the United States.
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- The CFTC ordered Kalshi to continue operating in Michigan despite a state court order requiring the platform to halt trading of sporting events.
- Kalci said she was caught between conflicting federal and state guidance after complying with the Michigan court ruling.
- The dispute adds to a growing legal battle as states challenge Calcci’s sports contracts while the Commodity Futures Trading Commission (CFTC) asserts exclusive regulatory authority.
According to A Order July 14 From the US Commodity Futures Trading Commission (CFTC), Calci must not comply with Michigan’s directive to stop offering contracts for sporting events and must continue to operate, even after the company said it had already reversed trading operations to meet state court requirements.
Conflicting instructions have left the CFTC-regulated prediction market platform caught between state and federal authorities. In a statement Robert Denault, chief executive officer and legal counsel for Calci, said on X that the company had already canceled the affected trades because a Michigan court had required it to do so.
“We are disappointed in this decision and believe it is unfair to Calci,” Denault said.
“We did act and terminate the transactions, as the Michigan court order required us to do. We were placed in an impossible position, looking forward to following state court orders that would conflict with our federal regulatory obligations. We had no other choice.”
Kalshi spokesman He told Reuters The company is reviewing the CFTC order and weighing its next steps.
Michigan has become the first state to attempt to intervene in derivatives contracts after they have already been implemented, the regulator said, describing the move as a challenge to the federal framework governing designated contract markets.
Michael Selig, head of the Commodity Futures Trading Commission (CFTC), said that canceling completed trades could create uncertainty in financial markets.
“Canceling deals that have already been executed is an unprecedented step that threatens to have a cascading effect on the entire market and undermines the certainty in contracting that is a necessary element of a functioning market,” Selig said.
“The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations,” he added.
Speaking on Fox Business last week, Selig also said it was “important” for the CFTC to maintain its authority over prediction markets.
He added that the agency has already filed a lawsuit against nine states and will continue to take legal action against any state seeking to impose civil or criminal penalties on CFTC-registered exchanges.
Michigan case adds to national legal battle
The latest order follows a June 29 ruling by Ingham County District Court Judge Rosemary Aquilina, who ruled temporarily I blocked everything of offering sporting event contracts to Michigan residents while the lawsuit is ongoing in the state. The court warned the company that it could face fines of up to $120,000 per day if it fails to meet geolocation requirements.
Michigan Attorney General Dana Nessel argued that Kalshi’s sporting event contracts functioned as unlicensed gambling products under the state’s legal sports betting law. Calci confirmed that its event contracts fall under the Commodity Exchange Act and therefore remain subject to the Commodity Futures Trading Commission (CFTC) rather than state gaming regulators.
Michigan is one of several states challenging Calci’s sports contracts. Massachusetts has Believer A preliminary injunction bars the platform from offering similar products while litigation continues, and the court recently allowed state authorities to expand their complaint with new allegations, including allegations that Calci targets users under 21.
New York also gave Kalchi an early setback. Earlier this month, Judge Analisa Torres to reject The company’s request for a preliminary injunction, allowing the state’s lawsuit to proceed after Calci’s finding, did not appear likely to succeed in its argument that the federal commodity law preempts New York’s gambling laws.
As the legal disputes expand, the CFTC continues to argue that Congress has given it exclusive authority over federally regulated prediction markets, while several states assert that sporting event contracts operate as sports betting and should remain subject to state gaming laws.
