U.S. CFTC moves to stop Kalshi from canceling trades as ordered by Michigan court
The U.S. CFTC is intervening to prevent a Michigan court from forcing the prediction market Kalshi to cancel previously executed trades. The agency argues that state-level interference undermines federal regulatory authority over commodity markets.
Why it matters
This case highlights a significant jurisdictional conflict between federal regulators and state governments regarding the legality and oversight of prediction markets.
The CFTC move amplifies its legal fight with state governments and courts over what its chairman argues is its unbreakable and exclusive regulatory authority over trading at Kalshi, which it regulates as a designated contract market (DCM).
"The commission will not allow states or state courts to bully registered entities into violating the Commodity Exchange Act and CFTC regulations," said CFTC Chairman Mike Selig in a statement alongside his agency's order. Selig has embraced prediction markets and promised to institute friendly regulations, and he's also vigorously defended his agency's authority to regulate them in a way that negates state powers.
The CFTC has sued a number of states that have sought to halt or penalize event contract businesses as illegal gambling. The agency noted Tuesday that Michigan is the first state to attempt to interfere in transaction activity directly.
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