CFTC orders Kalshi to honor Michigan trades amid state regulatory clash

The Commodity Futures Trading Commission (CFTC) ordered Kalshi to honor trades involving Michigan residents despite a state court's attempt to cancel them. A Michigan court had previously mandated Kalshi to cease offering sports-related event contracts and unwind certain trades. CFTC Chairman Michael Selig stated that federal law prohibits a Designated Contract Market (DCM) from discriminating against a state's residents and emphasized that canceling executed trades could destabilize the marketplace. This action is part of an ongoing dispute between the CFTC and various state regulators over jurisdiction over prediction markets, particularly those related to sports. Kalshi, a registered DCM under the CFTC and the Commodity Exchange Act, faces pushback from states like Michigan, which argue that such platforms facilitate online gambling. Michigan Attorney General Dana Nessel highlighted the importance of state gambling laws in protecting residents. The CFTC has also filed lawsuits against several states, including Arizona, Connecticut, Illinois, and New York, to assert its jurisdiction granted by Congress.

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