CFTC blocks Michigan’s attempt to cancel Kalshi trades

The CFTC ordered Kalshi to honor Michigan trades, blocking state-mandated cancellations and asserting federal authority over prediction markets.

The U.S. Commodity Futures Trading Commission (CFTC) has directed Kalshi, a federally regulated prediction market platform, to honor trades involving Michigan residents. This decision comes despite a Michigan state court's restraining order, which instructed Kalshi to stop offering sports-related event contracts and unwind certain trades. The CFTC exercised its emergency authority to block Kalshi's proposed rule to cancel these trades, arguing that states cannot force federally regulated exchanges to void executed contracts. The regulator emphasized that canceling completed trades would undermine confidence in regulated derivatives markets and that federal law preempts state gaming regulations for designated contract markets. This move highlights a growing jurisdictional conflict between federal and state authorities over prediction market regulation. While Michigan considers such platforms to be unlicensed sports wagering and has warned of legal consequences, the CFTC's intervention reinforces its exclusive regulatory authority over exchanges like Kalshi under the Commodity Exchange Act.