The federal derivatives regulator contends that Michigan's actions towards Kalshi are unjustified and constitute an overreach.
By Jesse Hamilton|Edited by Nikhilesh De Jul 14, 2026, 8:51 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Chairman Mike Selig of the U.S. Commodity Futures Trading Commission has instructed Kalshi to disregard any trade interference from Michigan courts. (CoinDesk)SummaryShow- Kalshi was poised to cancel prediction market trades made by Michigan clients following a court ruling, but the U.S. Commodities Trading Commission intervened, asserting that Michigan lacks authority over contracts.
- The CFTC has prohibited the firm from complying with the court's order, which originated from the state's recent actions to stop sports trades deemed illegal gambling by its attorney general.
- Michigan is among several states where the U.S. derivatives regulator is asserting its jurisdiction over prediction markets.
On Tuesday, the U.S. Commodity Futures Trading Commission stepped in between Michigan courts and prediction market operator Kalshi by issuing an order preventing the firm from complying with a local court's directive to cancel previous transactions made by its customers.
This action by the CFTC highlights its ongoing legal battle with state authorities regarding its claimed exclusive regulatory power over Kalshi, which it oversees as a designated contract market (DCM).
"The commission will not permit states or their courts to intimidate registered entities into violating the Commodity Exchange Act and CFTC regulations," stated CFTC Chairman Mike Selig in conjunction with the agency's order. He has expressed support for prediction markets and has committed to implementing accommodating regulations, while also vigorously defending the CFTC's authority against state encroachments.
The CFTC has taken legal action against several states that have sought to restrict or penalize event contract operations as illegal gambling. The agency pointed out that Michigan is the first state to attempt direct interference with transaction activities.
"Cancelling trades that have already been executed is an unprecedented action that could lead to a domino effect on the entire market and jeopardizes the certainty in contracts that is essential for a well-functioning market," Selig added.
In June, a county circuit court in Michigan ordered Kalshi to halt online sports betting within the state, as requested by the attorney general.
On July 2, Kalshi filed an emergency appeal with the CFTC regarding a court order demanding that trades from certain Michigan users be "voided, cancelled and refunded." The CFTC instructed the company to refrain from this action and stated in its order that allowing such reversals "could undermine public trust by causing traders to worry that their executed trades today might be undone at any point in the future."
Read More: Kalshi and prediction market sector embroiled in mixed bag of legal fights across U.S.
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Why it matters:
CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B.
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