The Commodity Futures Trading Commission (CFTC) ordered Kalshi to fulfill open trades in Michigan after a state court order directed the company to cancel certain previously executed trades involving Michigan residents.
The CFTC announced Tuesday it exercised its authority to stay an emergency rule change proposed by Kalshi in response to the court order.
Key Takeaways
- The temporary restraining order against Kalshi expired in Michigan on Monday.
- Michigan’s AG accused Kalshi of acting as an unlicensed gambling platform.
- Federal regulations prohibit prediction markets from treating customers differently depending on their location.
Michigan Attorney General Dana Nessel secured a temporary restraining order that blocked sports event contracts at the end of June. Although it did not entirely prohibit Kalshi from operating inside state lines, it declared that it could not offer sports event contracts, which it classified as a form of unlicensed sports betting.
Although the restraining order expired on Monday, the CFTC’s new order claims that the state did not have the authority to limit or interfere with prediction market operators attempting to fulfill their duties.
“A state cannot force a (Designated Contract Market) to violate its obligations, and federal law does not permit a DCM to discriminate against a state’s residents,” CFTC chairman Michael Selig said in a statement. “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.”
Kalshi had previously stated that Michigan’s restraining order meant that it would be in violation of state or federal guidelines, regardless of its actions. Michigan did not allow sports prediction markets, while the CFTC’s regulations state that prediction operators must treat each state equally.
The CFTC referenced that rule, saying that consumers must have “impartial access” to markets.
“The Commodity Exchange Act requires the CFTC to provide a uniform national market in derivatives transactions,” the announcement read. “The Commission is also tasked with ensuring continued public confidence in derivatives markets by guaranteeing market resilience and predictability, including in the execution and clearing of transactions.”
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The source of disagreement
AG Nessel previously argued that Kalshi’s sports event contract violated state gaming laws. The restraining order specifically noted that only unlicensed prediction markets would be banned, suggesting that they would have been allowed if they were registered with the Michigan Gaming Control Board.
“Our gambling laws exist to protect Michiganders from unlicensed, predatory operations, and failing to comply with them carries serious legal consequences,” Nessel said after receiving the temporary restraining order.
Today, @miattygen Dana Nessel secured a temporary restraining order in the Ingham County Circuit Court halting KalshiEx, LLC from unlawfully offering online sports wagers to Michigan residents. Read more at https://t.co/gyVOzHLr7O pic.twitter.com/47hPkuXvOp
— Michigan Attorney General Dana Nessel (@MIAttyGen) June 29, 2026
Michigan would be within its right to pursue another temporary restraining order or legal action against Kalshi. However, the CFTC’s interference indicates that it would not go unchallenged.
This is the first time that the CFTC explicitly ordered a prediction market operator to ignore state decrees. Numerous other states have found themselves engaged in litigation with CFTC-licensed platforms and the CFTC itself, although none have effectively directed platforms to change their operational standards by restricting specific markets.
In recent prediction market news, the CFTC has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin, all of which have taken various steps to police the prediction industry.
The CFTC also filed amicus briefs in the U.S. Court of Appeals for the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts.
