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CFTC blocks trade cancellations
The U.S. Commodity Futures Trading Commission ordered prediction-market platform Kalshi not to comply with a Michigan state court order requiring it to cancel trades involving Michigan residents, directing Kalshi to honor executed event contracts instead.
The CFTC said canceling already executed trades could trigger broader market disruption and undermine contractual certainty, and it framed the move as preventing states or courts from pressuring registered entities into violating the Commodity Exchange Act and CFTC regulations.
CFTC action followed a Michigan county circuit court order in June that barred Kalshi from facilitating what the state described as internet sports betting for Michigan residents, and a July 2 order directing Kalshi to cancel and refund trades made by Michigan users.
CoinDesk reported the CFTC issued an order to disallow Kalshi from meeting the local court demand that it cancel previous customer transactions, escalating the jurisdictional fight over what the chairman calls the agency’s exclusive regulatory authority.
The dispute centers on Kalshi’s status as a designated contract market (DCM), with the CFTC arguing that federal law governs the trading activity while Michigan sought trade reversals tied to its court orders.
Selig: no bullying
CFTC Chairman Michael Selig said the agency would not allow states or state courts to pressure registered entities into violating federal rules, warning that reversing executed trades is an unprecedented step that risks a cascading effect across the marketplace.
In a statement carried by The Economic Times, Selig said, "A state cannot force a registered contract market "to violate its obligations," and federal law does not permit a DCM to discriminate against a state’s residents,"" while the CFTC argued Michigan’s order interfered with federal law.
Better Markets’ Benjamin Schiffrin criticized the CFTC’s move as directing Kalshi to not comply with a Michigan state court order, quoting the court’s relief as requiring bets be "voided, cancelled, and refunded."
The Economic Times reported a Kalshi representative said the company was reviewing the CFTC’s order and considering its next steps, while representatives for the Michigan Attorney General’s office did not immediately respond to a request for comment.
The CFTC also said Michigan was the first state to attempt to interfere directly with already-executed derivatives transactions, distinguishing the order from other state enforcement efforts focused on whether Kalshi may offer sports event contracts in the first place.
Next phase: enforcement risk
The CFTC’s intervention does not lift Michigan’s broader restrictions on Kalshi’s sports event contracts, and the dispute continues to hinge on how far federal preemption extends over state court remedies tied to executed trades.
“Summary - The US CFTC said it issued an administrative order directing prediction-market platform Kalshi not to comply with a Michigan state court order to cancel trades”
According to DeFi Rate, Ingham County Circuit Court Judge Rosemarie Aquilina issued a temporary restraining order June 29 barring Kalshi from offering sports event contracts to people in Michigan and requiring the exchange to use a geolocation provider licensed by the Michigan Gaming Control Board.
DeFi Rate also reported the TRO threatened a $120,000 daily fine for failing to comply with the geolocation requirement, and a July 6 communication clarified that the trades had to be "voided, canceled and refunded," according to the CFTC.
At a Monday hearing described by DeFi Rate, Aquilina reportedly extended the order and gave Kalshi until Aug. 12 to implement state-compliant geofencing, with potential fines of $500,000 per day beginning Aug. 13.
The CFTC’s order to keep processing trades for Michigan residents therefore sets up a parallel track: Kalshi must fulfill pending contracts under normal settlement while Michigan’s geofencing and compliance deadlines continue to carry escalating penalties.
