Kalshi says CFTC, Michigan orders leave it in ‘impossible position’

Kalshi says it is being put in an “impossible position” after the US commodities regulator on Tuesday said it was blocking the prediction market platform from canceling trades in Michigan, contradicting a recent state court order.

On June 29, Kalshi was ordered by Ingham County Circuit Court Judge Rosemarie Aquilina to cease offering sports betting contracts to Michigan users while a lawsuit over whether Kalshi violated the state’s sports betting laws plays out. The Commodity Futures Trading Commission ordered Kalshi on Tuesday not to comply with the state order and continue operating.

“We are disappointed by this decision and believe it is unfair to Kalshi,” Robert DeNault, the company’s head of enforcement and legal counsel said in a statement on X. 

“We already acted and unwound the trades, as the Michigan court order required us to do. We are being put in an impossible position, looking to follow state court orders that may contradict our federal regulatory obligations. We did not have a choice.” 

Source: Robert DeNault

The conflicting orders highlight an unresolved regulatory divide between the CFTC and nearly two dozen state regulators over which authorities have jurisdiction over prediction markets. The CFTC said Michigan was the first state to attempt to interfere with executed derivatives transactions. 

“Canceling trades that have already been executed is an unprecedented step that risks a cascading effect on the entire marketplace and undermines the certainty in contracting that is a necessary component of a functioning market,” said Selig. 

“The Commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations.” 

A Kalshi spokesperson said it was reviewing the CFTC’s order and considering its next steps, according to Reuters. 

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Speaking on Fox Business on Friday, CFTC Chair Michael Selig said it is “critical” that the regulator maintains its regulatory authority over prediction markets.

“We’ve sued nine states now, and we’ll continue to sue any state that attempts to impose criminal or civil fines against CFTC-registered exchanges.”

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