The Commodity Futures Trading Commission ordered Kalshi on Tuesday to honor trades involving Michigan residents despite the state's attempt to force the prediction markets platform to cancel them.
About two weeks ago, a Michigan state court ordered Kalshi to stop offering sports-related event contracts and to unwind certain existing trades.
"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 Tuesday 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."
The CFTC's move is the latest development in a broader battle between federal regulators and states over who has authority to oversee prediction markets, particularly sports-related event contracts. Kalshi is a registered DCM regulated by the CFTC and the Commodity Exchange Act. Several states, including Michigan, have pushed back, essentially arguing that prediction markets platforms are providing venues for online gambling.
