CFTC Intervenes to Block Kalshi Trade Cancellations Ordered by Michigan Court

The federal derivatives watchdog, which regulates trading on Kalshi, said Michigan overstepped by pressuring the firm to undo completed trades. The U.S. Commodity Futures Trading Commission (CFTC) stepped in on Tuesday, issuing an order that prevents Kalshi from complying with a local court directive to cancel prior customer transactions.

The move escalates the agency’s legal battle with state authorities, as the CFTC maintains it has sole and definitive oversight of trading on Kalshi, which operates under its designation as a contract market.

In a statement, CFTC Chairman Mike Selig said the agency would not permit states or courts to coerce regulated entities into breaching federal law or CFTC rules. Selig, a supporter of prediction markets, has pushed for more accommodating regulations while strongly asserting the commission’s authority over the sector, even when it conflicts with state jurisdiction.

The CFTC has already taken legal action against several states attempting to restrict or penalize event-based trading platforms as gambling operations. It noted that Michigan is the first to directly intervene in completed transactions.

Selig warned that forcing the cancellation of executed trades would be unprecedented and could trigger wider disruption across markets, weakening the reliability that underpins contractual agreements.

In June, a Michigan circuit court ordered Kalshi to halt online sports betting activities in the state following a request from the attorney general.

On July 2, Kalshi filed an urgent request with the CFTC seeking guidance on how to respond to a court mandate requiring certain Michigan users’ trades to be voided, canceled, and refunded. The CFTC instructed the firm not to proceed, cautioning that allowing such reversals could erode trust in the market by raising fears that completed trades might later be undone.